Medical Plastics News editor Laura Hughes discusses her thoughts on medical device excise tax.
In June this year I headed out to New York - the city that never sleeps – to attend MD&M East, along with about 8000 advanced manufacturing professionals.
The Medical Design Excellence Awards also took place during the event. These awards aim to recognise the technological achievements of medical device manufacturers. It was great to applaud companies’ innovations, and the benefits they bring to our family and friends. By the way, apologies if there are any typos in this piece. I am currently typing this with a broken hand (netball!) following a trip to A&E (or ER as it’s known over the pond) where I got to see some of these innovations in action – every cloud has a silver lining.
While I was there, I had a long time to think in the waiting room, surrounded by medical tech. The prospect of the medical device excise tax going in to effect again in January 2020 is for me, and I’m sure many others, a concerning issue. This tax has the potential to affect the whole sector – from smaller start-ups to the big pharma giants.
According to the US Department of Commerce, 28,834 jobs were lost within the medtech industry from 2012 to 2015 when the tax was in place. The introduction of medical device excise tax could make business extremely difficult, particularly for smaller start-ups because of the way this tax works – being taxed on sales and not profit.
The potential loss of jobs, and the effect of this on the growth of the sector could be hugely detrimental to the future of medtech. According to a statistic published in the European Medical Journal the number of medtech patent applications is not only greater than the biotech and pharma sectors, but also on the rise since the medical device excise tax was abolished in 2015.
AdvaMed is doing a great job of banging the drum for the sector, and hopefully it won’t fall on deaf ears. The association’s president, Scott Whittaker, believes that repealing the tax for good would be a shot in the arm for innovation – and I have to agree.
Start-up and innovation awards will definitely help to encourage research in medtech, but will they be enough to keep the industry growing at the rate it currently is when the medical device excise tax is re-introduced? I’m not so convinced.