Device Tax Forcing Medical Products Company to “Throw in the Towel” on Manufacturing in U.S., CEO Tells White House
The chief executive of the Theragenics Corporation, a company that makes medical devices for prostate cancer treatment, wrote a letter to President Obama today in which she said the soon-to-be-implemented medical device tax will cost the equivalent of her company’s entire research and development budget and may force her to move manufacturing operations out of the country.
Christine Jacobs, Theragenics Chairman, CEO and President (and a Healthcare Leadership Council member) told the White House in a November 28 letter that the medical device tax, part of the Patient Protection and Affordable Care Act, will cost her company approximately $1.5 million per year out of its $83 million in annual revenues. She wrote, “Our entire R&D budget is $1.5 million so one can deduce what will have to be sacrificed going forward…innovation.”
She wrote that, because of the tax, “last week I signed an agreement to begin moving our U.S. manufacturing to Costa Rica. I am sorry to admit we have to ‘throw in the towel,’ Mr. President. Our 626 employees’ futures are not uncertain. The cost of regulation, legislation and now the device tax have provided an atmosphere that is close to untenable.”
Theragenics has factories in four states, manufacturing devices for prostate cancer, vascular access and wound closure.
Supporters of the medical device tax have argued that a larger patient population as a result of the PPACA legislation will counter the negative impact of the excise tax on device company revenues. In her letter, though, Ms. Jacobs points out the flaw in that argument.
“Our products are for people with prostate cancer, heart disease, breast cancer and orthopedic knee or hip surgeries. The pending influx of 24 million uninsured Americans are not likely to need our products because our average patient is elderly and already covered by Medicare, so forecasting increased sales because of the new population of patients is not real for us,” she wrote.
In her letter, she recommends to the President, “As you move forward with agenda items for your second term, I ask you to somehow factor in that small companies and businesses in the United States have very real burdens and impediments to growth…Instead of helping our country out of a tough climate, we are now forced into adding to the malaise by closing plants, laying off workers and none of this is of our own making.”
