The medical device industry is subject to one of the most buzzed about provisions of the Affordable Care Act. The medical device tax is a 2.3% excise tax on the gross sales of medical device manufacturers. The tax has led to a fair amount of unrest, and has been targeted for bipartisan repeal efforts.
Is the tax here to stay? How does it impact the industry, and what does it mean for independent medical device sales reps? We take a look below.
Is The Tax Likely to Stay?
The House has attempted to repeal the healthcare bill more than 40 times, so it’s never certain whether any provision of the ACA is here to stay. Unlike some other aspects of the bill, however, the medical device tax has been the subject of separate repeal talk and legislative effort. Democrats and Republicans alike have criticized the tax. Opponents say over a billion dollars have already been paid out as a result of it, and that the tax’s targeting of gross sales, instead of profits, makes it unfairly difficult for smaller medical device providers to get ahead. Opponents also say that the tax could lead to the outsourcing of jobs overseas, and slow sector growth.
Proponents of the tax see it as the medical device’s sacrifice for the opportunities the ACA presents – a larger market, as doctors and hospitals adjust to providing for millions of newly insured. Defenders of the tax cite the fact that the excise tax applies no matter where the device is made, in or out of the US, and thus it should not in and of itself drive outsourcing. More pointedly, supporters say the medical device industry has been protected for a long time, and that R&D budgets should not be affected by this relatively small medical device tax.
For at least the near future, it seems like the tax is not going away. With midterm elections coming up in November, there is a chance that that will change.
Medical Device Industry Impact
To get a sense of the real impact, we looked at FactCheck.org. The site, which tries not to take political sides, suggests that thousands, not tens of thousands, of jobs have been lost. The medical device tax is expected to raise $29 billion by 2023. It does not appear to be motivating massive outsourcing. In fact, medical device spokesmen have suggested the impact on medical device lines is unclear.
Impact on Medical Device Sales Reps
For medical device sales reps, staying informed about current events is important in communicating with potential buyers of your line. No one wants to buy from a company that is unable to deal with legislative hurdles such as this or cannot effectively communicate a response. The medical device industry is also expected to continue to grow, so for sales reps, this may be a change in the business environment, but the promising horizon remains.