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Cyberonics CEO Daniel Moore on the impact of the medical device tax on jobs and patient care.
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I know some of you've heard about this the French actor Girard Gephardt.
On millionaires in France he's one of them he said forget it I am leaving he fled the country.
Going somewhere else in fact all kinds of countries are getting excited and offering them citizenship including Russia.
But are some businesses in the US now the Girard -- Well now that the medical device taxes become reality that we may have some companies that are following -- -- -- argues what -- joining me now in a Fox Business exclusive.
Is Cyberonics president and CEO Daniel -- he's also the chairman of medical device manufacturer association so he speaks for.
Hundreds of these medical device companies and and -- we overstate it with the -- departure you're still very much based in the US but -- -- dipping your toe with another country.
Do know what could very well be a very comfortable tax situation.
And let's first talk about that.
Where are you breaking ground it is the first time your company ever has broken grab in this regard where -- it and -- Well is that is true we we -- 25 year old company and for the first time in our 25 year history.
We are going outside the United States to create a manufacturing facility.
And unfortunately that's been brought -- about partially because of the medical device tax.
On this medical device tax is not good for American jobs it's not good for innovation and most important is not good for patient care.
However if you combine this medical device pacts with other taxes we already pay as a corporation.
The tax rates just become onerous we had to do something to.
Start to decrease our overall tax impact.
And us specifically what we're doing is that creating manufacturing outside the United States in fact we're now going into -- going up Sunnis are doing that is while you're going to Costa -- act you are setting up we are -- -- history.
We are for -- first 25 years we've made all the product for the world here in the US and we are setting up our first manufacturing facility in Costa Rica.
Okay we we thought we have this picture -- made of Uncle Sam.
Pointing instead of saying I want -- -- exporting to Costa Rica because in away Euro arguing.
That this tax which by the way they should let people know what's what about two point -- understand it 2.3 percent tax.
On gross sales of all the medical device makers whether you make a profit.
You might not be profitable but nonetheless you will be having that excise tax on you.
And you feel that that the tax structure is better because what is it about Costa Rica that you like so much.
Well overall when we look at the that the tax burden that we're facing we have to do something the lower that tax -- burden and as you pointed out this is.
A 2.3 percent tax which doesn't sound like a lot of money but that is 2.3 percent.
On revenues not profitability right so it's stifling innovation as well for some of our member companies because.
They have to in addition to getting a return on the capital eventually to break even.
They have to do that with this some with the burden of this new tax -- an in our case -- system.
I'm -- manufacturing situation but for others it -- aren't -- well.
You have argued as chairman of the medical device maker association.
That's.
Really it it squeezes innovation and squeezes or research and development.
But but -- and let me just press you one more point here.
And I did a little bit of research -- since 1987 when Baxter International wedded to Costa Rica.
What is it that you're getting out of -- -- what's so great about their tax structure.
Well I think we're we're getting under a government -- working with us on tax I think our government fortunately we've gotten a lot of support.
From both the house and the senate that this medical device tax is bad and that we need to do something to repeal that device tax.
Men and I think we can get there in the next couple of months but this this tax is already cost thousands of jobs not last year.
And it's expected to cost tens of thousands of jobs in this coming year.
So whatever we can do to lessen the impact of the the tax burden and can be creating jobs.
In an economy where I think the president and congress agrees we need to grow the economy.
We need to grow jobs particular US manufacturing jobs and that's what were about.
Penis and if you doctors aren't that US medical device makers and I -- you my dad was a surgeon used to talk about guards all the time.
-- specifically very very innovative you have to be up to take chances when it comes to medical devices but let me play devil's advocate -- do this because.
I've interviewed other medical device makers Wal-Mart is track of of Medtronic one of the biggest the biggest pure play -- It -- will deal with that we have to I know they're bigger certainly bicker but.
You look at your stock for example in the past year you were up more than 55%.
-- most of the medical device hasn't done pretty well because they figured that with millions added to the insurance rolls and maybe we can show your stock.
Over the past year with millions -- to the insurance rolls.
It'll wash over the 2.3 percent excise tax that -- get so many more customers for your products which in your case are the well you make -- the that is the neurological and devices.
In so many cases.
More people.
Will we -- product.
-- that that has not proven to be the case and we don't expect it to be the case going forward I think.
This is that when when we're looking at what happened here and in the case of Massachusetts where.
There was universal care provided for all citizens as a medical device industry we did not see an increased.
I'm most patients that that use our devices are covered by Medicare and what we're talking about with this policy.
Is younger patients who typically -- are healthier and don't need devices so when we're paying a 2.3 percent device tax.
It is already impacted thousands of jobs it won't impact tens of thousands of jobs going forward important impact in of.
Any chance he will go beyond repair -- there any chance you'll see a repeal of at least that tax or at least some type of compromise you hearing anything about that as we finish up.
Well we think anything short of a repeal is the wrong move so we we do as I mentioned earlier we do have support on both -- house side.
We've had support on the senate side for a repeal and we're gonna continue to pursue that repeal because that's the right thing to do for American American manufacturing.
And you have a whole host of people that are supporting you on that whole host of companies Daniel more Cyberonics CEO and president of the MD MA chair it's great to see you thank you closing bell --
