News | November 11, 2009

MDMA Denounces 2.5 Tax on Medical Devices

November 11, 2009 - The House of Representatives approved the H.R. 3962, the Affordable Health Care for America Act, by a narrow 220-215 margin, moving to the legislation now to an uncertain outcome in the Senate. The bill includes, in section 552, a 2.5 percent excise tax on medical devices sold for use in the U.S.

The language states, "there is hereby imposed on the first taxable sale of any medical device a tax equal to 2.5 percent of the price ..." Taxable sale means the first sale (at the point of sale) for a purpose other than for resale, after production, manufacture or importation. The tax would not apply to exported devices or to retail sales.

The tax intends to make medical device companies contribute cuts to help make up for the costs of expanding coverage. The logic is that the taxes levied on medical device companies will be offset due to an increased pool of insured beneficiaries receiving treatment are overstated.

However, as the Medical Device Manufacturers Association (MDMA) indicates, the cost to the medical device industry would exceed an estimated $20 billion over 10 years. This is in addition to other elements of the bill, including the $155 billion in payment reduction to hospitals, cuts in medical imaging, durable medical equipment and clinical lab supplies are also included in the bill.

MDMA President and CEO Mark Leahey went on to state, “In the coming weeks our hundreds of member companies across the country will do all we can to communicate the detrimental impact this fee will have on achieving the long term objectives of health care reform. The bill should include provisions that promote innovation and improve patient care, not harm the system.”

For more information: www.medicaldevices.org

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