Medical device tax suspended for two years. Again

January 23, 2018

stethoscopeThe deal struck by U.S. legislators on Monday to shut down the government shutdown included an “unexpected surprise for medtech,” writes Amanda Pedersen on sister brand MD+DI’s website: Another two-year suspension of the medical device tax. 

The 2.3% excise tax on most sales of medical devices is part of the Affordable Care Act, aka Obamacare. A two-year suspension just ended at the beginning of this year, much to the chagrin of the medical device industry, which vigorously opposes the tax. Industry association AdvaMed has tarred it as a “job killer” and a diversion of much-needed resources from R&D investment.

“AdvaMed applauds passage of the two-year suspension of the medical device tax,” said President and CEO Scott Whitaker in a statement posted on the AdvaMed website. “This suspension is good news for American patients and American innovation. Congress' action—just days before medical technology innovators were set to start cutting checks to the IRS—means funds will not be diverted from current investments in jobs, capital improvements and research into new treatments and cures.” Whitaker went on to say that, while the suspension is welcome, “it is only an interim step toward the truly needed action by Congress to fully repeal this tax and unleash the promise of medtech innovation. We look forward to continuing to work with the Hill on a bipartisan basis to drive toward permanent relief.”

Earlier this month, Massachusetts senators Ed Markey and Elizabeth Warren re-introduced a bill that would accomplish just that. It would repeal the tax and pay for it by ending tax breaks and closing loopholes for oil and gas companies. Massachusetts is a medtech hub with 480 device companies that account for 14% of the state’s exports, according to MassBio, whose stated mission is to advance Massachusetts' leadership in the life sciences and grow the industry.

In true congressional fashion, however, legislators chose to punt, for now, with a second two-year suspension.

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