AdvaMed pushes for full repeal of medical device excise tax

Chief financial officers and research and development executives from the Advanced Medical Technology Association (AdvaMed) headed to Capitol Hill in an attempt to push for a full repeal of medical device excise tax.

Medical device excise tax is planned to come in to effect in January 2020. Many within the industry are cautious about this decision as according to the US Department of Commerce 29,000 jobs were lost from 2013-2015 when medical device excise tax was previously in place.

It is also thought that billions of dollars were diverted from research and development to be spent on medical device excise tax. If the tax is successfully implemented in 2020, a reduction of $2 billion worth of spends on research and development is anticipated.

One of the key issues surrounding the tax implementation is how detrimental it is for smaller start-ups which are not yet profitable. This is because the tax is based on sales and not profit. Therefore, if the tax comes into effect it is likely this will make it extremely difficult for start-ups to succeed. Currently 80 percent of medical device companies have 50 employees or less, so this tax could have a huge impact on the sector.

Scott Whitaker, president and CEO of AdvaMed commented: “CFOs and research and development directors at medtech companies have a unique perspective. They’re the ones tasked with answering the question surrounding how their companies can survive, let alone thrive and deliver for the patients they serve, if this tax on revenue is implemented on New Year’s Day 2020.

“When the medical device tax was in place, research and development executives across the medtech industry were forced to cut jobs or shelve investments, which kept life-changing innovations from patients in need. Their message to Congress is simple: Allowing this tax to go into effect again would lead to more job cuts and less innovation - full repeal will allow us to invest more in the technologies that save and improve lives.”