Oregon life sciences leaders celebrate repeal of medical device tax

By Elizabeth Hayes  – Staff Reporter, Portland Business Journal

Jan. 8, 2020

A tax on medical device sales died in December, and Oregon bioscience industry leaders couldn’t be more pleased.

“The fact it was finally repealed sends a strong signal,” said Juergen Lindner, general manager at Micro Systems Engineering, a division of Biotronik, which has its North American headquarters in Lake Oswego.

The 2.3 percent tax on revenue, which was part of the Affordable Care Act, had been on hold since early 2016, but it was slated to return at the end of 2019. The bipartisan spending package that passed Congress at the end of the year brought a final end to the levy.

Before the hiatus, the IRS had collected between $1 billion and $2 billion a year from 2013 through 2015, Forbes reported.

Liisa Bozinovic, Oregon Bio Executive Director, called the repeal a “huge deal.”

“We’ve invested a lot of time and resources over the years working with Oregon’s federal delegation to postpone or repeal the tax and to highlight what a burden it is to innovation,” Bozinovic said.

Out of 186 companies in Oregon in the life sciences sector, 100 are device makers. Economic output for the subsector was $2.5 billion in 2017, most of which is from exports of devices outside of Oregon. It accounts for 4,800 direct jobs that pay, on average, 144 percent of the state’s average for private sector employment, according to Oregon Bio.

“Companies were bracing for (the tax) to return in 2020 and worried about the burden it would create and what that translates into is a loss in jobs and output,” Bozinovic said.

Biotronik/Micro Systems could have absorbed the financial hit, but it would have made the Oregon site less attractive a place for the global leader in cardiac devices to expand, Lindner said. The parent company is based in Berlin but employs 350 workers in Oregon who make the electronics for pacemakers and defibrillators.

“We’re the largest medical device company in Oregon, and we have a substantial R&D and manufacturing operation,” Lindner said. “We are competing with multiple sites in Germany, Switzerland and Singapore. There’s always a question of where to invest and grow. The tax didn’t make the Oregon site more competitive. We want to keep it going and grow, and we have to show it’s a favorable environment.”

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