Medical-Device Makers to Pay $40 Billion in Fees

September 15, 2009 - The Finance Committee in a health-overhaul bill calls for device makers to pay $40 billion in fees over 10 years, with the specific amount based on each company's market share.

Meanwhile, medical-device manufacturers are rushing to reverse billions of dollars in fees proposed by the Senate Finance Committee. The fees resulted from a lobbying move where medical device-makers went to the White House this spring to volunteer financial concessions as part of an overhaul where they were asked to provide a financial figures in savings. The companies suggested that instead the government should tax hospital-purchasing groups (GPOs) that negotiate for lower prices on medical supplies and some devices. This way, they reasoned, the GPOs would pass on some or all of that tax to the device makers.

Finance Committee Chairman Sen. Max Baucus (D., Mont.), plans to make public his bill today, and the new fees on device makers' revenues are expected to be part of the new law. According to the bill, all manufacturers would be assessed at a rate based upon their U.S. sales to generate $4 billion annually beginning in 2010.

Some say the government believes device makers will greatly benefit from an overhaul because wider insurance coverage will bring them more customers, and the White House wants savings commitments to help pay for the package.