NewsPublic AffairsPolitics / March 31, 2014

Pence Calls For Repeal Of Medical Device Tax

Sam Klemet

Gov. Mike Pence wants President Barack Obama to repeal the medical device tax that is part of the new health care law.

Pence says that tax is hurting the economy and eliminating it will allow companies – specifically those in life sciences – to grow and expand.

Indiana exports almost $10 billion of life sciences products every year – second in the nation. And the industry has about a $55 billion economic impact on the state.

Mohan Tatikonda thinks it is unlikely Gov. Pence’s letter to the President will lead to a repeal, but thinks symbolically it has value.

"It is very important that Gov. Pence and other policy makers and industry leaders speak out about this issue, so that those who make these decisions regarding this legislation are aware of the impact and hopefully in the future will make different decisions," he said.

Tatikonda is the research director of the IU Kelley School of Business Center for Business of Life Sciences. He says the Indiana life sciences industry may suffer in the short term, but believes eventually, the state will figure out how to work around the tax.

"The firms in Indiana have shown us over the years that they are able to adapt and change to new marketplace and regulatory and competitive realities," he said.  "I think in the long run that everything will be fine, however, in the short and medium terms there will be some impact."

The 2.3 percent tax went into effect last year.

Director of the IU Center for Business of Life Sciences, George Telthorst, says the tax is causing companies – specifically startups – to cut back.

"There are some investments that are not being made because of money that would have gone to into either capital investments for new equipment and new plants or R and D (research and development) spending to generate new products are not being done because it's being sent to the government," he said.