Medical device tax: Survey says jobs are on the line

TAX LOGO

A substantial portion of surveyed medtech executives said the 2.3% medical device excise tax would lead to layoffs in the U.S., according to tax impact survey conducted by the Medical Imaging & Technology Alliance.

The respondents, executives from MITA members companies, said they expected to pay more than $287 million dollars in additional taxes next year.

In the survey 41% of participants anticipated job cuts that would impact manufacturing, sales, management and service workers. Nearly 30% also predicted a reduction in research and development funding.

"This burdensome tax is bad policy, and it has left manufacturers with little choice but to reduce their workforce and cut research and development – none of which create economic value or enhance patient care," MITA executive director Gail Rodriguez said in prepared remarks. "Such a large new tax jeopardizes thousands of American jobs in a difficult economic climate and poses a serious threat to innovation of new life-saving imaging technologies."

Rodriguez said the medical device industry supports more than 400,000 jobs in the U.S. and MITA urged Congress to take action immediately to prevent the tax and ultimately repeal it, he added.

Warnings of layoffs have been a big part of discussions about the medical device tax, and some companies have gone as far as citing the levy as the driver for job cuts ahead of implementation.

Device maker Welch Allyn earlier this year  decided to cut 275 jobs, which amounts to 10% of its global workforce, in order to cut costs ahead of the levy. Medical device companies Zimmer (NYSE:ZMH), which laid off about 50Hill-Rom Holdings (NYSE:HRC), which cut about 200, and Stryker (NYSE:SYKwhich cut more than 100, have all cited the tax as a primary justification for layoffs.

The 2.3% excise tax on device sales, scheduled to go into effect in January 1st, 2013, was created by the Affordable Care Act. A group of 18 senators last week sent a sent a letter to Senate majority leader Harry Reid, requesting him to prevent the medical device tax from taking effect, according to the note.

MITA is part of a coordinated effort with other medtech industry groups attempting to lobby members of Congress to get action on the tax before it takes effect in January.

The group, which includes the Medical Device Manufacturers Assn. and AdvaMed., has organized D.C. fly-ins, showered the Beltway with ads and cultivated Democratic support for the cause, resulting in "tremendous progress" toward repeal, Moebius told MassDevice.com.

Medical device industry group AdvaMed has maintained that it’s "cautiously optimistic" that it can generate enough support to spur action on the tax before it hits, either through delaying implementation or outright appeal, but some industry players aren’t so sure.

Abbott Medical Optics president and former AdvaMed chairman James Mazzo told MassDevice.com last week that he believes a modification or delay of the tax is possible, but that seeking repeal of the tax simply isn’t realistic.

RSS From Medical Design & Outsourcing

  • GlobTek presents its latest level VI AC/DC adapter and connverter
    T-43086-WWVV-X.X-Q Model is an addition to GlobTek’s Level VI compliant GT-43086 family and represents GlobTek’s 6 Watt wall plug-in series of AC/DC adapters (power supplies and chargers) with International Interchangeable blades. GlobTek’s changeable input blade system with individual field replaceable input plugs, including: North America and Japan NEMA 1-15P, Australian, UK BS 1363, European CEE […]
  • Sanmina’s familiarity with FDA gets skin treatment product to market fast
    The medical market for cosmetic devices is booming. However, quickly launching new products to meet demand is becoming more challenging because device manufactures face increased regulatory scrutiny. To help meet regulatory requirements, aesthetic and other medical-device OEMs are partnering with electronics manufacturing services (EMS) companies that also offer expertise with the FDA filings necessary to […]
  • Fluid connectors and quick disconnects for IVD equipment from CPC
    Colder Products Company (CPC) offers thousands of tubing connectors, quick disconnects and fittings for smart fluid handling in IVD and analytical equipment. Non-spill connectors speed testing throughput by eliminating drips, preventing air inclusion and increasing operator safety. Panel mount connectors can be added to existing equipment or bottle caps to provide secure, leak-free connections. Puncture […]
  • 310 Watt desktop medical power supply meets efficiency level VI requirements
    Power Partners releases a new 310 Watt medical grade desktop power supply from their PEAMD Series of AC and DC adapters. The 310 Watt unit is packed for ideal performance inside a compact case measuring 7.8 x 4 x 2 in. with a weight of only 3 lbs. The PEAMD310 Series is approved to the latest […]
  • Saelig introduces Multiple Instrument System MIS4 universal test system
    Saelig Company has introduced the ABI Electronics’ Multiple Instrument Station MIS4, an all-in-one testing tool that provides all commonly required test instruments in one compact programmable hardware module, mounted in a compact case or installed in a PC-drive bay. Controlled by ABI’s sophisticated SYSTEM 8 Ultimate PC software with a simple yet programmable operator interface, […]
  • AssurX announces document management software update for small to mid-size companies in FDA regulated industries
    AssurX, an enterprise quality management, risk and regulatory compliance solution provider, announces the release of the latest update to their AssurX document management software. The document management solution provides a cost-effective solution for small to medium sized companies faced with streamlined operations and is fully compliant for FDA regulated industries. Ideal solution for small to […]
  • Saelig presents new Amplicon Impact-R 1100F series computer
    Saelig Company announces the Amplicon Impact-R 1100F series, a fanless system powered by the Intel ATOM D2550 processor. Configured with a high performance 2.5 in. MLC Solid State Drive (SSD), the Impact-R 1100F series is a silent controller system. With options for multiple serial communication ports, the Impact-R 1100F can offer up seven DB9 connections […]
  • Gerresheimer to acquire Centor
    Gerresheimer AG, a partner to the global pharmacy and healthcare industry, will further extend its pharmaceutical packaging business with the acquisition of Centor. Gerresheimer has reached an agreement with Nemera Development S.A. to acquire 100% of the share capital of Centor US Holding. “Centor is the highly profitable market leader for plastic vials and closures in […]
  • Methods Machine Tools presents the new Nakamura-Tome NTRX-300
    Methods Machine Tools, a developer of precision machine tools and automation, has introduced the new Nakamura-Tome NTRX-300, a multitasking turning center featuring complete parts machining in one operation, with a built-in load and unload automation system and advanced operator recognition management software. The NTRX-300 features true opposing twin spindles: an 8 in. A2-6 25 HP or […]
  • MSC Apex Diamond Python and Smart Midsurface speeds modeling to validation
    MSC Software announced a new release of MSC Apex, the company’s award-winning next generation Computer Aided Engineering (CAE) platform. The MSC Apex Diamond Python release introduces: · The fourth release of MSC Apex Modeler is a CAE Specific direct modeling and meshing solution that streamlines CAD clean-up, simplification and meshing workflow. New in this release is […]
  • Quality Metrics: FDA’s plan for a key set of measurements to help ensure manufacturers are producing quality medications
    Editor’s Note: This article is written by Ashley Boam and Mary Malarkey from the “FDA Voice” blog. Boam is an FDA’s acting Director of the Office of Policy for Pharmaceutical Quality, the Office of Pharmaceutical Quality and the Center for Drug Evaluation and Research. Malarkey is an FDA’s Director if the Office of Compliance and Biologics Quality […]

Leave a Reply