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Health Subcommittee Chairman Kevin Brady On Medical Device Tax Repeal Prospects

Wednesday, March 27, 2013

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HH: I’m so pleased to welcome now Congressman Kevin Brady of Texas’ 8th Congressional district. He is chairman of the Health subcommittee on the Ways and Means Committee in the House. Congressman Brady, welcome, it’s great to have you on the program.

KB: No, Hugh, thanks for having me on. I appreciate it. In fact, I’ll tell you what, you’ve interviewed some of our key leaders on tax issues in Washington, so thanks for letting me get a shot.

HH: Well, I’ve got to tell you, though, I may have hurt your reputation at the beginning of the hour, because Karl Rove said he’s a good friend of yours. And you know, every time I have Rove on, I get called a RINO, so you might get called a RINO now, too.

KB: Oh, yeah, I know how that works. I understand.

HH: So Mr. Chairman, on your Health subcommittee, I’ve been focused in on this medical device tax, because the Senate voted 79-20 to dump the thing last week, and I’m hoping it gets through, you know, a clean bill that Erik Paulsen puts in there. Is that going to happen when you guys get back from break?

KB: You know, I don’t know the timing of it, but that vote in the Senate was a bit of a game changer in the sense that we’ve always known we have the votes in the House to do this and repeal that completely now. But in the Senate, the leaders have always blocked any chance to even get a feel for what would happen over there. So now that we know where the votes are, yes, we can move forward. One of our challenges is that any tax bill must originate in the House. Our worry is if we send a tax bill like the medical device over there, the Senate will strip it away and fill it with a bunch of tax increases on families and small businesses, and others across America. And so we’ve still got a bit of a challenge on how to do it, but now we know we can do it.

HH: So clearly, if they did clutter up the bill, then it would go to conference, and it wouldn’t emerge unless you guys got it clean again, because I don’t think it’s anyone’s intention to do anything other than bring tax relief. But I did hear from some of your colleagues in the House, and I’ve been hearing from people off the air, pay for will kill this in the Senate, the Senate doesn’t want to pay for it, and Marco Rubio said maybe we don’t have to do it in this case, because we’re killing jobs. It’s a jobs bill. And then I heard we’ve got to wait for comprehensive tax reform. So how about those two issues? Do you need a pay for in the House version of a clean repeal? And does it have to wait?

KB: Well, I don’t think we need the pay for, frankly, because it is a tax cut. It is a huge, literally, tens of thousands of good-paying American jobs, plus the damage is does to our innovation economy going forward. So I don’t think you necessarily have to have a pay for. And I don’t think it has to wait for fundamental tax reform, necessarily, because this really is a one off tax increase that makes no sense, and whose whole principle is that we are told, is that well, medical device manufacturers will benefit from having new patients under Obamacare, so you should pay this revenue, this sales tax, just for the privilege of manufacturing in America, which we think is flawed in about a dozen ways.

HH: Now I’m talking with Chairman Kevin Brady. He’s chairman of the Health subcommittee on the Ways and Means Committee. He’s from Texas’ 8th Congressional district. One of the things that as a long-standing partisan Republican, Congressman, has been frustrating is sometimes, our party is not the nimble party. It doesn’t move very quickly.

KB: Yeah.

HH: And by the time we get around to doing this, the Senate will have forgotten their 79-20 vote. Does that alarm you at all?

KB: Not in this case, I don’t think it will, because again, this was the first breakthrough where we actually could see on the record who was supporting us. We had a sense there was better support in the Senate than was being discussed. But now that we know it, I think being able to get a real bill over there and voted on, or even started there and sent to the House, frankly, where we can move it once or twice and get it done, I think our chances increase dramatically because of that vote. So no, I don’t think we’re going to wait.

HH: And does that mean April, maybe?

KB: Well, I don’t know. I hate to overpromise without knowing for sure, but when we get back obviously right after Easter, it’s going to be a top priority.

HH: Now I want to ask you on the substance side, on Monday, I spent the entire show, I had three people in studio with me – Tom Loarie, who’s a serial start-up entrepreneur, Robert Grant, who’s an investor in the medical technologies space, and then Gary Wolensky, who’s one of my law partners, who’s been defending medical device companies for two decades. And here’s what they said. The investor said it’s harder to raise the money, the CEO said it’s harder to get from start-up to approval, 12.4 years, and the trial lawyer said whenever they do get something approved, they get attacked by plaintiffs lawyers again and again and again, mostly unsuccessfully, but it still happens.

KB: Yeah.

HH: Does the committee get that? I mean, do you get enough testimony that this industry, which is so vital to America, is just getting pummeled?

KB: Yeah, we really do, and frankly, they started early making this case that the damage was going to occur even before the tax took effect, which it did, and that long term, the consequences were just what your panelists outlined. That’s why this is one of the few areas of the President’s new health care law that has such bipartisan opposition, because the industry spoke out early, laid it out, and I know I’ve toured in Houston our medical device companies, and boy, their potential both in life-saving breakthrough type treatments, the jobs that they’re creating, you know, I have to give the industry credit. They got out early, they laid it out. I think that’s why there’s such strong support.

HH: I’ve got to say, you also have some very smart people on this subcommittee. We were talking with a number of your colleagues, I mean on Ways and Means, and sometimes on the subcommittees will come on, and they all have these medical device companies. I mean, Erik Paulsen has 200 medical device companies in his district.

KB: Yeah, he does, and it’s one of the reasons he’s such a key leader in this area. Plus, you know, around the country, again, if you look at what drives our economy, innovation is such a big part of it, and these companies are in our backyard, or they’re buying supplies from companies in our backyard, everyone’s backyard. So I think that’s been key to this as well.

HH: Pete Roskam as well. Well, Congressman, have a great Easter, and I hope I talk to you in April, and congratulate you on a subcommittee vote, and I look forward to that, and maybe getting the Senate to go along and save some jobs.

KB: Absolutely. Hugh, thanks again, love to come on again in the future.

HH: Look forward to it on many, many different issues, Kevin Brady from Texas’ 8th Congressional district.

End of interview.

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