Medical-device manufacturer to lay off 1400 …

posted at 2:05 pm on July 29, 2011 by Ed Morrissey

In March 2010, Nancy Pelosi warned us that we had to pass ObamaCare to “find out what’s in it.”  What is in it is jobs for China.  What’s not in it is jobs for Americans, as the Boston Globe reports today (via NewsAlert):

Boston Scientific Corp. said yesterday that it plans to eliminate 1,200 to 1,400 jobs worldwide during the next 2 1/2 years to free money for new investments, the Natick medical device maker’s second major round of cuts since last year.

The company would not say how many jobs will be lost in Massachusetts, where fewer than 2,000 of its 25,000 employees are based. In February 2010, Boston Scientific said it would pare 1,300 jobs worldwide, but similarly did not say where.

Yesterday’s move, a day after Boston Scientific disclosed it was investing $150 million and hiring 1,000 people in China, raised fears that the company will gradually shift more work to foreign sites with less government oversight and lower costs than the United States.

Massachusetts state Senator James Elridge (D-Acton) reacted … predictably:

“My sense is, sadly, that like many other American companies, they are shedding jobs in Massachusetts and adding jobs overseas,’’ Eldridge said. “And this is a company making greater profits, so it’s even more outrageous.’’

Yes, that’s what happens when the American government makes it more expensive to do business in the US.  And that’s exactly what ObamaCare did, especially with medical-device manufacturers like Boston Scientific.  Fourteen months ago, those manufacturers warned that they would have to cut costs in the US as a consequence of the new taxes imposed on their sales:

Massachusetts medical-device companies say they’ll cut back on operational costs – and jobs – after a planned 2.3 percent tax on their products is implemented in 2013, according to a new survey.

The Massachusetts Medical Device Industry Council, which held its annual meeting yesterday in Boston, said about 90 percent of the 100 medical-device firms said they would reduce costs due to the new tax tucked into the recently passed health-care reform bill.

It’s not as if Boston Scientific didn’t try to warn people about the problem, either.  Less than two weeks ago, they joined hundreds of other medical-device manufacturers to plead for a repeal of the tax:

More than 420 companies including Boston Scientific, St. Jude Medical and Stryker signed on to a letter asking the U.S. Congress to repeal a planned 2.3 percent excise tax on medical devices. The tax could cost $20 billion a year and is set to take effect in 2013 as part of broad health care reform package passed last year.

“The tax is already having an adverse impact on R&D investment and job creation, jeopardizing the U.S. global leadership position in medical device innovation,” said the letter.

“If this tax is not repealed, it will continue to force affected companies to consider cutting manufacturing operations, research and development, and employment levels to recoup the lost earnings due to the tax,” it said. “It will also adversely impact patient access to new and innovative medical technologies,” it added.

“The medical device excise tax is a serious burden for companies struggling to maintain America’s global leadership in the development of medical technology,” said Stephen J. Ubl, president and CEO of the Advanced Medical Technology Association (AdvaMed), a medtech lobbying group that drafted the letter.

The tax wasn’t the only problem in the bill, either, as I wrote at the time:

Taxes on companies aren’t ultimately paid by business entities.  They get paid by the consumer in the long run.  In order to save costs, these device manufacturers will either have to lay off employees or cut back on innovative research — and likely both.  The end result will be higher prices, lower support, and less innovation to meet medical needs of consumers.

That’s not the only problem facing the industry, either.  They now have to provide an accounting for their marketing efforts among physicians, thanks to a new “sunshine bill” that requires full disclosure of any marketing directed at physicians.  That will escalate internal costs, putting even more pressure on device makers to cut elsewhere or raise prices, or both.

The jobs will move overseas mainly to meet demand overseas.  But we could have kept the jobs and sales here, had it not been for the increasing regulatory and tax policies of the Obama administration, starting with — but hardly ending with — ObamaCare.

Update: I changed the headline, because as TNeloms points out in the comments, not all of the closed jobs are in the US.  However, given the reaction of Democrats in Massachusetts, it’s looking like a good chunk of them will be.

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