But other industries have defeated Democratic legislators and allied interest groups.
Silicon Valley united in the 1990s to fend off lawyers who prospered by suing companies when their stock prices fell, the firearms-industry won legal protections via a Supreme Court decision in 2010.
The medical device tax has to be paid starting in 2013, but companies are planning ahead, Hawkins said.
“If you look at all the companies that have announced that they are moving to China, Ireland and Canada, you’d be shocked by the number of jobs that have already left or that are leaving,” he said.
For example, this year Boston Scientific announced in July that it would invest $150 million in a Chinese factory, New Jersey-based C.R. Bard announced 200 layoffs from a factory in Queensbury, N.Y.., Massachusetts-based Covidien announced it would cut U.S. expenses by roughly $200 million per year and also expand overseas, while Indiana-based Zimmer Orthopedics laid off 100 workers.
The 2.3 percent excise tax on revenues has a big impact, partly because the competitive international market means U.S. companies can’t pass the price on to customers, but also because it deeply cuts into profits and deters investors, especially for niche products that have only a few thousand patients, Hawkins said.
For example, the company makes an a high-tech device that allows the body to repair gaping holes in internal organs, such as the intestinal tract. “We don’t sell many of them, and it’s not that big of a revenue for us,” said Hawkins, but it is enormously valuable for American kids and teenage African mothers whose lives are blighted by “anal fistulas,” he said.
The excise tax is just another burden on top of existing hindrances, which include a slow regulatory review process for new products, high corporate taxes, extra taxes on repatriated profits, and constant portrayal of company executives as “crooks,” Hawkins said.
The slow pace of regulatory review is especially painful, because the company needs approval for all of its 16,000 products, he said. In practice, slow approvals ensure that overseas competitors can sell new products into emerging markets faster that U.S. companies. he said.
One obvious solution, he said, is for U.S. companies to move factories and design teams to overseas sites. By moving overseas, he said, “we can still do business, but he problem is, we don’t employ Americans.”
The U.S. government, he said, is “doing everything [it] can possibly do to run medical-device companies out of this country.”