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News & Press: Medical Device Tax

Medical Device Tax Suspended for Two Years...Again

Tuesday, January 23, 2018   (0 Comments)
Posted by: John Ray
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MPO Magazine

Sam Brusco, Associate Editor
01.23.18

 

Monday’s deal to reopen the government gave almost no one what they wanted—except for medical device companies. (Well, that's not entirely true. The Children's Health Insurance Program—CHIP for short—had gone 114 days without a budget, and will now be extended six years.) The spending deal signed by President Trump contained a two-year delay of the 2.3 percent excise tax, which was originally a provision in the Affordable Care Act to help pay for health insurance subsidies. The action is a continuation of previous two-year suspension of the tax in 2016 and 2017.

 
The industry had been all but begging for relief from the tax for months before it took effect on January 1. First payments would have been due by January 29, but now the tax will go into effect on January 1, 2020. The medical device industry cheered the last-minute legislation.
 
“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,” said Scott Whitaker, president and CEO of the Advanced Medical Technology Association (AdvaMed) regarding the passage of the current continuing resolution, which includes the two-year suspension of the medical device excise tax. “We appreciate Congress’ action and the leadership of so many Members who have worked to keep this crucial issue front and center.”
 
He added, “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.”
 
Mark Leahey, president and CEO of the Medical Device Manufacturers Association (MDMA), shared his own comments regarding the device tax suspension, “MDMA applauds Congress for passing legislation that funds the government and reauthorizes CHIP, while protecting medical technology innovation from the destructive impact of the medical device tax by suspending it for two additional years.  We remain committed to working with the broad, bipartisan coalition that supports a full and permanent repeal of the device tax this year so that this dynamic American ecosystem can deliver the next generation of cures and life-saving therapies, and provide the high-tech manufacturing jobs that develop them.”
 
“Cook Medical would like to thank our congressional delegation for their leadership to extend the suspension of this tax on medical device companies. We appreciate the acts of Congress to benefit patients and employees,” said Steve Ferguson, chairman of Cook Group, Cook Medical’s parent company. “Since the tax was implemented in 2013, U.S. medical device companies both large and small have faced uncertainty for the future related to innovation for patients.”
 
“The two-year extension of the device tax suspension helps us to bring new life-saving devices to patients. As we look to the future, we will continue working with our congressional leaders for a full repeal of the medical device tax. Repealing this tax is crucial for patients who rely on medical devices and look to our industry to continue researching and developing projects that will innovate new therapies for those who need it most.”
 
“Today, the Senate, followed by the House, passed legislation to fund the government until February 8, which also provides for a two-year retroactive delay of the medical device tax. The 2.3 percent excise tax on the sale of medical devices was reinstated on January 1, 2018, after a bipartisan two-year suspension ended in December of last year, and was expected to cost up to 25,000 jobs by 2021 and reduce future investments in research and development (R&D),” stated Joe Panetta, Biocom’s president and CEO. “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.”


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