Senate’s Vote to Repeal Medical Device Tax – Form Over Function?

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Despite the Senate’s recent vote to repeal the medical device tax by a margin of 79-20, Forbes reports that the vote will have little practical effect on medical device manufacturers, at least in the short term.  In order to abolish the tax, the article states that the loss of potential revenue from the tax, equal to over $10 billion over 10 years, would have to be completely offset by alternative revenues.  The article posits:

Is there a possibility of the medical device tax being removed (or modified) down the road?  Yes there is – but that road is much more potholed and twisted than many medical device manufacturers think.

According to the article, the 2.3% excise tax on the sales price of medical devices, which was passed as part of the Affordable Care Act, currently applies to almost any FDA-registered device intended for human use.  Because the tax can apply to “everything from MRIs to tongue depressors to ultrasounds to condoms,” the article notes the concern that many taxpayers may not realize that the law can directly affect them.  The article discusses a number of other considerations medical device manufacturers will likely face, including whether a particular company is overpaying, the potential to limit tax liability by determining the “price” of the medical device itself (as separate from bundled services), and situations involving contract manufacturers.  The full article is available here.

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