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Jan 27, 2015

Med Device Excise Tax Debate: Let Your Voice Be Heard


Executive Vice President, MasterControl Inc.

Since January 2013, medical device manufacturers and importers have been paying a 2.3 percent excise tax as part of the Affordable Care Act. The tax is assessed regardless of the company’s profitability.

Critics say the excise tax stifles innovations and kills jobs, while supporters say it will be offset by the increased number of insured people receiving treatments.

A bipartisan bill (called Medical Device Innovation Protection Act) was reintroduced in the U.S. Senate on Jan. 13 in an effort to repeal the excise tax. As a long-time member of the medical device professional community, I believe this latest legislative action deserves our attention. 

Whether you are for or against the repeal of the excise tax is perhaps secondary to the fact that after two years of its implementation, we are now getting a chance to evaluate its impact to the industry. Now is the time to take a closer look at the pros and cons.

Industry Impact

The Device Tax Repeal Coalition, composed of 1,000 industry organizations and companies, patients, and providers, estimates that the excise tax collects about $25 billion (1).

The coalition is asking Congress to repeal the tax because it adversely impacts patient care and innovation. In a letter sent to Congressional leaders, the group enumerated the following negative effects:


  • It stifles innovation and has already cost thousands of high-paying jobs;
  • It imposes additional heavy burden on American companies already struggling against foreign competition in the global marketplace;
  • There is no evidence of windfall from increased demand of medical devices, the premise for the establishment of the tax


This article is related to the How Medical Device Firms Can Adapt to New Excise TaxTo get the full details, please download your free copy

Opponents of the tax may go to www.no2point3.com to sign a petition supporting repeal of this controversial piece of the Affordable Care Act.

On the other hand, the Congressional Research Service, a nonpartisan arm of Congress, said the negative effects on jobs and profits are relatively modest because the excise tax is small. It estimates that as a result of the excise tax, about 47 to 1,200 jobs could be lost (2).

Let Your Voice Be Heard

If you work for a medtech company, what’s your experience? Is it close to what the Device Tax Repeal Coalition is describing or do you agree with the Congressional Research Service’s study?

The current legislative action will have long-term repercussions for the industry and the general public. Get in touch with your industry association or with your Congressional representatives to participate in the debate. Let your voice be heard.

 References:
(1) From the letter sent by the Device Tax Repeal Coalition, viewed on Jan. 22, 2015 at: http://advamed.org/res.download/818

(2) “New Analysis Challenges Arguments for Repealing Tax on Medical Device,” by Robert Pear, New York Times, Jan. 13, 2015, http://www.nytimes.com/2015/01/14/us/tax-has-modest-effects-on-medical-device-makers-report-says.html?_r=0


Matthew M. Lowe, executive vice president at MasterControl Inc., is a mechanical engineer with over a dozen years of medical device experience in product development, product management, and regulatory compliance. Prior to joining MasterControl in 2006, he worked in product development and product management at Ortho Development Corp. and Bard Access Systems. He has successfully launched more than a dozen medical devices and has four patents issued. His regulatory compliance experience includes writing a 510(k) that was cleared by the FDA and managing a multisite, multiyear postmarket clinical study for orthopedic devices.





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