House Passes Healthcare Reform With 2.3% Medical Device Excise Tax

Rather than an overall medical device industry fee, the healthcare reform legislation that was passed by the U.S. House of Representatives Sunday night includes a 2.3 percent device excise tax that takes effect in 2013. Earlier versions had it starting in 2010.

The tax will apply to devices from surgical instruments to bedpans, according to published reports.

“MDMA is very concerned about the impact a $20 billion device tax will have on patient care, innovation and small business. If eliminating the tax is not possible, structuring it to provide relief for smaller companies is critical. Under the current structure, many companies will owe more in taxes than they generate in profits, requiring companies to layoff employees, cut R&D budgets and slow the development of new therapies would have improved the quality of care for all Americans. Moving forward, these issues must be addressed before the tax takes effect,” said Mark Leahey, president and CEO of the Medical Device Manufacturers Association.

Steven Ubl, president and CEO of the Advanced Medical Technology Association, said:“While we remain concerned about the effects of the medical technology tax, we applaud expanded insurance coverage for millions of American families and the significant progress in a number of important areas, including an enhanced program of clinical comparative effectiveness research that will improve medical decision-making and enhanced transparency in the financial relationships between providers and the health care industry,” adding that Congress and the White House should always consider the impact of policy changes on innovation and medical progress.

Earlier versions of healthcare reform legislation called for a $40 billion tax over 10 years. The 2.3 percent tax brings it closer to $20 billion.