Medical Devices Tax Drains Innovation – By Carolyn Garcia

January 29, 2013

America has long been the leader in innovation, ingenuity, discovery and breakthroughs; however, we are on the verge of losing our competitive edge in so many areas of healthcare due to the implementation of ObamaCare. One such area is in medical devices technology. A new tax has been imposed called the medical devices tax. This tax imposes a 2.3% tax on all medical device sales, not profits. Reuters reported this tax is expected to raise around $29 billion in revenues through 2022. The tax applies to sales of taxable medical devices beginning January 1, 2013.

What is a “taxable medical device”? It is any device defined under Section 201(h) of the Federal Food, Drug, and Cosmetic Act (FFDCA) that is intended for humans, and those listed with the Food and Drug Administration (FDA) under Section 510(j) Just some of the medical devices are artificial joints, cardiac stents, scanners, radiotherapy machines, prosthetics, pacemakers, etc.

The government has defended the tax by stating “Medical manufacturers and importers (who) will now have access to 30 million new customers due to the health care law,” says Treasury Department Spokeswoman Sabrina Siddiqui. However, the device tax “could cost upwards of $660 million annually in implementation costs alone.”

Numerous small device companies have said this tax and new regulations would practically put them out of business.

Many of these companies are not your large corporations, but small companies with all their profits poured back into the company for development and promotion of new medical devices. They do not have the resources to support a massive new tax, puls all the new regulations that accompany it. This tax will cause many companies to shut down, driving up unemployment, and even worse, drive companies to move out of the country where taxes and regulations are less stringent.

The House of Representatives repealed the Medical Device Tax last June, but it has not been taken up in the Senate. This is bad news for further advancement in medical technology. It is also bad news for hospitals where this tax is being passed along to them and will wind up coming out of the pockets of patients.

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