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Medical Device Tax
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Medical Device Excise Tax

What is the medical device tax?

  • As part of health care reform, Congress passed a 2.3% excise tax on most types of medical devices which took effect January 1, 2013. The excise tax is based on revenue, not profit, and will ultimately harm small-to-midsize innovative medical device companies the most. 
  • The medical device tax is estimated to cost $30 Billion over 10 years.
  • Initial studies of the tax calculated that over 40,000 well-paying jobs in the medical device industry will be LOST due to the implementation of the tax.
  • An AdvaMed survey documents 33,000 direct job losses in the industry as a result of the tax.
  • Many companies will owe MORE in taxes than profits.
  • The medical device tax was suspended in bi-partisan fashion at the end of 2015. But unless Congress acts this year, this bad tax will be re-instated on January 1, 2018.
  • A recent MDMA survey revealed that 88 percent of innovators would slow down hiring and/or have to eliminate jobs if the device tax is reinstated in 2018. (A previous MDMA survey showed that as a result of the two-year device tax suspension, 70 percent of companies increased hiring and created new jobs.)
  • Current repeal legislation has broad-based bipartisan support in both houses of Congress.
  • The excise tax will adversely impact innovation and R&D investment for all medical technology companies, and disproportionately impact small-to-midsize companies, which drive innovation, scientific discovery and job growth. 

What is FMMC’s position?

The FMMC has opposed the medical device tax from the beginning, and continues to work for a full repeal of this bad policy.

 

The negative impacts of the 2.3% medical device excise tax, passed as part of the Affordable Care Act (ACA), are no longer theoretical – they are real. Industry surveys published more a year after the tax went into effect on January 1, 2013, reveal significant job losses and, perhaps more ominously, deep cuts in R&D investment and deferred or cancelled capital investments in order to pay the tax. And a recent MDMA survey showed 88 percent of med-tech companies would slow down hiring and/or have to eliminate jobs if the device tax is reinstated in 2018.

 

The medical device tax is particularly problematic for Florida – a state that is rich in medical technology manufacturers. Florida is home to one of our nation’s largest medical device economies – encompassing 662 device manufacturers employing nearly 21,000 Floridians, paying an average annual wage of more than $60,000. Florida is one of the top five med-tech job producers in the country; and the vast majority of Florida medical device manufacturers (80%+) are small, entrepreneurial firms, employing fewer than 25 people. These are the companies that have been driving Florida’s job creation and innovation in patient care in the medical technology sector.

This bad tax is adversely impacting innovation, R&D investment and job expansion in our state, and is disproportionately impacting small-to-midsize companies – the lifeblood of Florida’s medical device industry.

 

Proponents of the medical device tax reflexively suggest that this new levy will be more than offset by increased demand for medical devices as result of “millions” of new insured individuals promised by the ACA.  But there is simply no evidence suggesting a device industry "windfall" from healthcare reform. Unlike other industries that may benefit from expanded coverage, the majority of device-intensive medical procedures are performed on patients that are older and already have private insurance or Medicare coverage. Where states have dramatically extended health coverage, such as in Massachusetts where they added 400,000 new covered lives, manufacturers did not experience a “windfall” in demand for their medical devices.

 

The FMMC continues to work with our elected officials, members and partner organizations on bipartisan proposals to repeal or delay the medical device tax to ensure that patient care, innovation and job creation continue to thrive.

How can I help?

Sign the FMMC Industry Letter in support of a full and immediate repeal of the medical device tax. Also, contact your U.S. Representative and Senators directly and tell them to repeal the onerous medical device excise tax.

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1/16/2018
Special Sarasota Breakfast Briefing: "Effective Communication with the FDA"

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