Supreme Court Ruling Leaves Medical Device Excise Tax in Place, Reports Kalorama Information

16 Jul 2012 • by Natalie Aster

While supporters and opponents of President Obama’s healthcare reform legislation let out boos or cheers for the recent decision of the United States Supreme Court, one industry will not be pleased, according to Kalorama Information. The healthcare market research publisher says that the medical device industry will face additional costs because of a tax provision in the act that is set to begin in January of next year. This will likely be of concern to the $322 billion world medical device industry.

According to the report “Global Market for Medical Devices, 3rd. Edition” by Kalorama Information, the Patient Protection and Affordable Care law included new tax provisions intended to help fund healthcare reform, which require device manufacturers to pay a 2.3% excise tax on “taxable medical device” sales beginning January 1, 2013. The tax applies to medical device products intended for human use, but exempts eyeglasses, contact lenses, and hearing aids, as well as devices that are “generally purchased by the general public for retail or individual use.” Some companies have warned investors of the taxes they expect to pay in 2013 as a result of the tax:
Johnson and Johnson, the largest device company, estimated that it will pay between $200-$250 million under the new law
Teleflex stated it would face $15 million in charges
Becton Dickinson said that 80% of its US revenues would be subject to taxes

Report Details:

Global Market for Medical Devices, 3rd. Edition
Published: May, 2012
Pages: 135
Price: US$ 2.500,00

Kalorama notes that the Medical Device Manufacturers Association (MDMA) and other groups have fought to reduce the target size of the tax, as well as the rate. The group is currently working to repeal or change the provision in the Healthcare Reform bill. The repeal of the tax, popular in the medical device industry, has thus far been unsuccessful.

More information can be found in the report “Global Market for Medical Devices, 3rd. Edition” by Kalorama Information.

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