Device manufacturers are not seeing the offsetting gains (in the form of additional healthcare recipients using more devices) promised by the sponsors of the Affordable Care Act.
Device manufacturers have fallen into two distinct camps regarding funding the 2.3 percent excise tax:
- Large OEMs with profitable business units (lines) that absorb the cost of tax in the device’s sales price and maintain the margin of the medical device through reduction of the cost of goods (i.e., consolidation of overhead functions—layoffs and/or reduction of labor costs through offshoring and transfer of manufacturing to lower labor-cost countries); and
- Mid-level to startup companies with low to unprofitable business units (lines) that 1) increase the sales price of the product to “collect” the incremental cost of the MDET or 2) pass along the MDET as a separate “line item” charge when invoicing the customer.