FLASH: Medical device tax payments hit the $1B mark

MassDevice.com coverage of the medical device tax

The 2.3% medical device sales tax has cost the industry an estimated $1 billion so far, according to a report released by a coalition of medical device lobbying groups, which called the milestone "frightening."

The tax costs medical device makers an average of $194 million per month, funds which should be going to research & development efforts and to salaries for new employees, according to the Medical Imaging & Technology Alliance, AdvaMed and the Medical Device Manufacturers Assn. 

"Each day that goes by with the medical device tax in effect is a major roadblock for patient care, job creation and innovation," MDMA president & CEO Mark Leahey said in prepared remarks. "This issue is a shining example where there is overwhelming bipartisan support in both chambers of Congress to right a wrong, and MDMA continues to work with all stakeholders to get repeal of this onerous policy across the finish line."

The tax, implemented by the Affordable Care Act in order to help raise funds for healthcare reform, took effect at the start of 2013, despite the efforts of medtech industry groups to strike the levy in Congress. Although device makers have managed to generate support from lawmakers on both sides of the aisle, repeal efforts have been hindered by disagreements on how to make up for the $30 billion in revenue the tax is supposed to raise over the course of a decade.

The industry has made tried to distance its medical device tax repeal from discussions about healthcare reform, framing the issue as one concerning corporate tax reform. Opponents of the tax may have a new vehicle to hitch their hopes to as Congressional duo Sen. Max Baucus (D-Mont.) and Rep. Dave Camp (R-Mich.) recently embarked on a nation-wide tax reform tour, but in the mean time the industry is required to make semi-monthly sales tax payments of about $97 million each.

"The $1 billion threshold is frightening as every dollar spent paying for this medical device tax threatens medical innovation and American jobs," MITA executive director Gail Rodriguez said in the press release. "MITA is pleased to see bipartisan support for repeal of the tax building in both the House and the Senate, but Congress cannot wait any longer to repeal this burdensome tax and protect jobs and essential R&D funding."

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