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The Deadly Tax on Medical Innovation


Uppity Water Nymph
Feb 12, 2007
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The Land of Funk
A thoughtful column about how ObamaCare's taxes will impact medical innovation. Excerpt:

Raymond Kurzweil has generalized Moore’s Law as “The Law of Accelerating Returns,” arguing that technological progress overall follows a roughly exponential curve. This exponential curve is a natural reflection of the fact that today’s progress forms the base of tomorrow’s innovation. This create a virtuous cycle in which innovators continually build on each other’s work, adding to an ever-increasing fund of knowledge, which in turn allows for future innovations. When people are left free to innovate, the exponential gains they create are therefore akin to the exponential growth we see in our bank balances when we allow compound interest to operate over time.

However, such exponential gains are not automatic. Moore’s Law (and Kurzweil’s generalization) are not laws of nature. Instead, they presuppose a system of government that leaves innovators free to create. Conversely, a government that penalizes innovation could dramatically slow the pace of medical progress, leading to millions of preventable deaths. And this may be one of the worst long-range consequences of the recently passed ObamaCare health legislation.

One of the many new taxes imposed by ObamaCare is a 2.3% excise tax on medical device manufacturers. Although this may not seem like much, it could be devastating to small companies working with thin profit margins.

For instance, the Zoll Medical Corporation is one of the leading manufacturers of automated external defibrillators (AEDs). These devices are commonplace in airports, shopping malls, and other public places. They are meant to be used by members of the general public to give immediate life-saving electrical shocks to someone suffering sudden cardiac arrest.

Advances in hardware and software have made these devices sufficiently reliable that they can be safely used by “Good Samaritan” bystanders with no formal medical training. The AED device itself analyzes the patient’s electrical rhythm and gives voice instructions to the user as to whether and when to safely shock the patient. According to a recent paper in the New England Journal of Medicine, making AEDs widely available to the public could significantly improve the survival rates of cardiac arrest patients.

However, the ObamaCare tax would impose an additional $7.5 million annual burden on Zoll, nearly eliminating their annual profit of $9.5 million. As their CEO Richard Packer recently explained on a Fox News interview with Neil Cavuto:

PACKER: So, it almost wipes out our profits.

CAVUTO: So, you have a couple of choices here. You cut jobs or send them overseas, or you increase the price of your product, not easy to do.

PACKER: Yes, or cut back on research and development. And our business is built around new science, new clinical trials.

CAVUTO: Or a lot more people die as a result…

To make matters worse, it is the small startup companies which are the engine of so much innovation that would be disproportionately harmed by this tax....

Pajamas Media The Deadly Tax on Medical Innovation

One of the worst aspects of intrusive government is we will never know the real opportunity cost of what people could have accomplished if their freedom where not violated. Making matters worse is the Dodd bill which will kill off angel and venture capital investing.


Annoying Customer
Sep 7, 2008
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Who lifted the ban on federal funding for embyonic stem cell research?

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