The industry had been all but begging for relief from the tax for months before it took effect on January 1. First payments would have been due by January 29, but now the tax will go into effect on January 1, 2020. The medical device industry cheered the last-minute legislation.
“AdvaMed applauds passage of the two-year suspension of the medical device tax. This suspension is good news for American patients and American innovation. Congress' action – just days before medical technology innovators were set to start cutting checks to the IRS – means funds will not be diverted from current investments in jobs, capital improvements and research into new treatments and cures,” said Scott Whitaker, president and CEO of the Advanced Medical Technology Association (AdvaMed) regarding the passage of the current continuing resolution, which includes the two-year suspension of the medical device excise tax. “We appreciate Congress’ action and the leadership of so many Members who have worked to keep this crucial issue front and center.”
He added, “While the two-year suspension is welcome, it is only an interim step toward the truly needed action by Congress to fully repeal this tax and unleash the promise of medtech innovation. We look forward to continuing to work with the Hill on a bipartisan basis to drive towards permanent relief.”
Mark Leahey, president and CEO of the Medical Device Manufacturers Association (MDMA), shared his own comments regarding the device tax suspension, “MDMA applauds Congress for passing legislation that funds the government and reauthorizes CHIP, while protecting medical technology innovation from the destructive impact of the medical device tax by suspending it for two additional years. We remain committed to working with the broad, bipartisan coalition that supports a full and permanent repeal of the device tax this year so that this dynamic American ecosystem can deliver the next generation of cures and life-saving therapies, and provide the high-tech manufacturing jobs that develop them.”
“Cook Medical would like to thank our congressional delegation for their leadership to extend the suspension of this tax on medical device companies. We appreciate the acts of Congress to benefit patients and employees,” said Steve Ferguson, chairman of Cook Group, Cook Medical’s parent company. “Since the tax was implemented in 2013, U.S. medical device companies both large and small have faced uncertainty for the future related to innovation for patients.”
“The two-year extension of the device tax suspension helps us to bring new life-saving devices to patients. As we look to the future, we will continue working with our congressional leaders for a full repeal of the medical device tax. Repealing this tax is crucial for patients who rely on medical devices and look to our industry to continue researching and developing projects that will innovate new therapies for those who need it most.”
“Today, the Senate, followed by the House, passed legislation to fund the government until February 8, which also provides for a two-year retroactive delay of the medical device tax. The 2.3 percent excise tax on the sale of medical devices was reinstated on January 1, 2018, after a bipartisan two-year suspension ended in December of last year, and was expected to cost up to 25,000 jobs by 2021 and reduce future investments in research and development (R&D),” stated Joe Panetta, Biocom’s president and CEO. “Biocom commends lawmakers for providing relief to medical device manufacturers. The medical device tax increases the effective tax rate for the medical technology (medtech) industry and stifles innovation by taking financial resources away from R&D investments, capital expansion and hiring. It is especially burdensome for small companies that are not yet profitable because it is a tax on revenue, not on profit.”
“Suspending the tax will ensure that the more than 2,000 medtech establishments in California will continue to have the resources to develop the breakthrough products and technologies that are needed by millions of patients around the world. Nevertheless, Biocom continues to support permanent repeal of the tax and looks forward to working with Congress to provide permanent relief,” he added.
Kelly Slone, president and CEO of BioUtah, issued the following statement following the passage of the suspension, “BioUtah welcomes passage of the two-year delay of the medical device tax. We’re grateful to Senator Orrin Hatch (R-UT), Representatives Mia Love (R-UT-04), John Curtis (R-UT-03) and the entire Utah congressional delegation for their unwavering support. This delay is of paramount importance to the numerous companies in our state, both large and small, that produce critical medical technologies to help patients live longer, healthier lives. Now, instead of preparing to pay the IRS, these companies can continue to focus on innovation and investment. Longer-term, the tax must be fully repealed to provide the certainty this industry needs to expand in Utah, deliver cutting edge breakthroughs and further advance health care worldwide.”