Survey results suggest medical device tax will heavily impact R&D
The Medical Alley Association has conducted a survey on its members to determine the impact of the implementation of the medical device excise tax which will come into effect on 1st January 2020, following its suspension in 2016.
Participants in the survey responded with the following if the medical device tax is reinstated:
- 83% of respondents will decrease research and development spending
- 67% of respondents indicated they will delay or forgo planned hiring
- 47% said they would suspend plans to physically expand their business
Medical Alley Association president and CEO, Shaye Mandle commented: “These results confirm what we’ve heard in private meetings: The medical device tax actively chills innovation and disproportionately hurts small businesses. There is bipartisan support for repealing the tax and we urge Congress to act before the end of the year.”
AdvaMed President and CEO Scott Whitaker added: “The harm the medical device tax will do to patients is clear.
“Reduced research and development spending means fewer life-saving and -improving innovations. Delayed hiring – combined with the 21,390 job losses predicted by the Tax Foundation last week – means fewer scientists and engineers working to discover the medical technologies of tomorrow.
“The tax has been suspended for longer than it was ever in place precisely because everyone recognises these consequences. There is overwhelming bipartisan agreement that the medical device tax is bad health policy, bad tax policy, and bad for American patients. It’s time to repeal it once and for all.”
Additionally a new survey by industry and business news publisher, SmartBrief has discovered that more than half of medical device company employees expect reinstatement of the medical device excise tax in 2020 to lead both to job losses and cuts to research and development programmes.
Key findings of the SmartBrief survey were:
- 18.63 percent of respondents were concerned that reinstatement of the device tax would cause companies to cut back on research and development spending
- 16.67 percent feared layoffs would occur
- 6.86 percent predicted a hiring freeze
- 5.88 percent thought there would be other general spending cuts
Talking about the SmartBrief survey Whitaker commented: “First the experts at the Tax Foundation predicted more than 21,000 lost jobs if the tax goes back into effect. Then an internal survey by one of the country’s largest regional medtech associations showed most medtech company leaders preparing for a hiring freeze or research and development cuts or both. And now we have another study of medtech employees, more than half of whom expect jobs and research and development to be cut.
"The entire industry has seen this before, and that’s why they’re all bracing to see it again if Congress doesn’t stop this tax from going into effect on New Year’s Day.”
AdvaMed has previously called on the president of the United States and Congress to repeal this tax.