After a two-year suspension, the medical device excise tax has been reinstated in the US.
Tax
The 2.3% tax, which manufacturers have to pay on all sales and imports of certain medical devices, was originally introduced as a funding measure for the Affordable Care Act in 2013. The tax was suspended in 2015 for two years after opposition from medical device manufacturers and politicians.
Groups have argued that the tax negatively impacts job creation, device innovation and increases the cost of healthcare.
The Advanced Medical Technology Association (AdvaMed) and the Medical Imaging & Technology Alliance (MITA) have been strong advocates for the tax’s suspension.
Last year, CEO of AdvaMed, Scott Whitaker, wrote to president Trump asking him to overturn the tax. Whitaker wrote: “In 11 days, the medical device excise tax is set to be reinstated, meaning a massive tax increase is on its way. I am writing to you to underscore the devastating impact this tax has and will have on our industry. I know you have long supported repealing this onerous tax. I want to emphasise why, unlike other business taxes, retroactive relief from the device tax is not feasible and why action this year is essential”.
Whitaker argued that when previously active, the tax resulted in the loss or deferred creating of jobs, reduced R&D and also slowed capital expansion. He also wrote that the tax previously resulted in a loss of around 29,000 jobs.
The tax is expected to badly hit small companies that have developed innovative medical devices but have not potentially made much revenue from sales.
MITA has voiced its opinion on the tax and hopes it will be repealed once again in 2018. In a statement Patrick Hope, executive director of MITA, said: “Ultimately, we hope that Congress will continue to work toward full repeal of the medical device tax to safeguard high-paying, high-quality industry jobs and ensure that patients have access to the latest medical imaging technology.”
A spending bill due for 19 January could provide those in support of a repeal with an opportunity to get the tax suspended.