Medical device industry applauds US tax suspension

Medical device companies have applauded US Congress action for once again suspending the medical device tax.  

After strong opposition from a range of medical device manufacturers and politicians, US Congress agreed to pass a stopgap bill for the medical device tax.

The tax will now resume on 1 January 2020 and is expected to cost the federal government almost $4 billion during that period.

The medical device tax resumed at the start of January and would place a 2.3% tax on any sales of medical devices. First payments were due starting 29 January.

It was originally introduced as a funding measure for the Affordable Care Act in 2013 but was suspended in 2015 after opposition from manufacturers and politicians.

Speaking about the suspension, Scott Whitaker, president and CEO of AdvaMed, said: “AdvaMed applauds passage of the two-year suspension of the medical device tax. This suspension is good news for American patients and American innovation. Congress' action – just days before medical technology innovators were set to start cutting checks to the IRS – means funds will not be diverted from current investments in jobs, capital improvements and research into new treatments and cures.

“We appreciate Congress’ action and the leadership of so many members who have worked to keep this crucial issue front and center.

“While the two-year suspension is welcome, it is only an interim step toward the truly needed action by Congress to fully repeal this tax and unleash the promise of medtech innovation. We look forward to continuing to work with the Hill on a bipartisan basis to drive towards permanent relief.”

Californian life sciences company Biocom, said: “Biocom commends lawmakers for providing relief to medical device manufacturers. The medical device tax increases the effective tax rate for the medical technology (medtech) industry and stifles innovation by taking financial resources away from R&D investments, capital expansion and hiring. It is especially burdensome for small companies that are not yet profitable because it is a tax on revenue, not on profit.

“Suspending the tax will ensure that the more than 2,000 medtech establishments in California will continue to have the resources to develop the breakthrough products and technologies that are needed by millions of patients around the world. Nevertheless, Biocom continues to support permanent repeal of the tax and looks forward to working with Congress to provide permanent relief.”