Patents and the Arithmetic of the Medical Device Tax

The medical device industry is pushing hard to repeal a tax imposed as part of the Affordable Care Act (ACA). The NYT had an article on its massive bipartisan lobbying effort. While the piece notes in passing that, "the White House argues that demand for new devices will offset the economic impact of the tax," the piece doesn't explain what this means.

The marginal cost of producing most medical devices is very low relative to their price. The companies are in effect collecting a big premium...