Device makers plan to offset tax burden by raising prices | MassDevice.com On Call

February 9, 2012 By MassDevice staff Leave a Comment

MASSDEVICE ON CALL — Most small medical device companies may deal with the added burden of the impending 2.3% medical device tax by passing the cost onto customers, an industry survey found.

Of 180 device industry executives surveyed, about 75% of which represent companies with fewer than 50 employees, more than half reported that they plan to increase prices for their products in order to fully or partially offset the effects of the levy.

The tax continues to be a point of contention in the industry, with advocates like AdvaMed and executives like Cook Medical chairman Steve Ferguson arguing that it represents a burden on jobs, innovation and patient access to life-saving technologies.

"Less than 17% of respondents indicated they would reduce headcount to absorb the excise tax’s impact," according to the survey, conducted by the Emergo Group. "Increasing prices, lowering production costs and investing in less research and development all ranked higher than layoffs as options for dealing with the tax."

AdvaMed recently revealed plans to frame repeal efforts as tax reform, hoping to divorce the industry’s beef with the legislation from arguments surrounding health care reform.

"Repealing the device tax is the 1st down-payment on much-needed tax reform," AdvaMed president Stephen Ubl said during a conference call with reporters this week. "The device tax had little to do with the Accountable Care Act, except that it was added to obtain $20 billion to help pay for the bill."

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