We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies. Cookie Policy.

Features Partner Sites Information LinkXpress
Sign In
Advertise with Us

Download Mobile App




US Medical Device Tax Suspension Will Initially Benefit Small Firms

By HospiMedica International staff writers
Posted on 10 Jan 2016
Print article
The two-year suspension of the 2.3% medical device excise tax should allay medical device industry concerns, with the greatest effect being on smaller companies. These are the latest findings of Kalorama Information (New York, NY, USA), an independent medical market research firm.

According to the report, thousands of companies were broadly impacted by the medical device excise tax, and it was especially felt by companies with just one or two products and less than 50 employees. As the tax was on sales and was paid out whether a device earned a profit or not, concerns were raised that the tax would squeeze out research and development (R&D) funds, since an estimated 7% of revenue goes to R&D, and large firms did not change their allocations greatly since the enactment of the tax.

“We didn't see the effect on research on development broadly in the industry, but venture capital money did go away at the same time the tax was enacted,” said Bruce Carlson, publisher of Kalorama Information. “R&D spending in major firms continued to be a similar percentage of revenue as in the past, with top firms spending hundreds of millions of dollars.”

The report found that in 2014, Johnson & Johnson (J&J, New Brunswick, NJ, USA) was the largest single medical device taxpayer with USD 180 million in payments, followed by Medtronic at USD 112 million. Covidien (Dublin, Ireland) paid USD 60 million, Smith and Nephew USD 25 million, and of C.R. Bard (Murray Hill, NJ, USA) USD 3.5 million.

“It's welcome news, especially for the multitude of smaller companies in this industry. A top 20 device company can pay tens of millions and post a note in their annual report,” added Mr. Carlson. “A small company with one device needs all monies from their sales. Small device companies are often funded by venture capital, least able to raise price or find a partner to merge with, and companies where the two point three was critical operating funds.”

Alongside devices that did incur tax, audiology devices and wheelchairs were exempt from taxes under the original statute. Oxygen concentrators, glucose monitors and other point of care (POC) tests, ileostomy bags, walkers, home medical beds, and bandages, which were not specifically named in the original statute, were also granted favorable US internal revenue service (IRS; Washington DC, USA) rulings later on. As a result, the actual tax burden was slightly less than predicted.

Related Links:

Kalorama Information
Johnson & Johnson
Covidien


Gold Member
POC Blood Gas Analyzer
Stat Profile Prime Plus
Gold Member
STI Test
Vivalytic Sexually Transmitted Infection (STI) Array
Silver Member
Wireless Mobile ECG Recorder
NR-1207-3/NR-1207-E
New
LED Examination Light
LED 110

Print article

Channels

Critical Care

view channel
Image: Researchers have developed a novel risk score for cardiovascular complications after bone marrow transplant (Photo courtesy of 123RF)

Novel Tool Predicts Cardiovascular Risks after Bone Marrow Transplantation

Every year, thousands of people undergo bone marrow transplants to potentially cure serious diseases like leukemia, lymphoma, and immune deficiency disorders. While these transplants can be lifesaving,... Read more

Surgical Techniques

view channel
Image: The Early Bird Bleed Monitoring System provides visual and audible indicators of the onset and progression of bleeding events (Photo courtesy of Saranas)

Novel Technology Monitors and Lowers Bleeding Complications in Patients Undergoing Heart Procedures

Bleeding complications at the femoral access site can significantly hamper recovery, affecting the success of procedures, patient satisfaction, and overall healthcare costs. It is crucial for surgeons... Read more

Patient Care

view channel
Image: The newly-launched solution can transform operating room scheduling and boost utilization rates (Photo courtesy of Fujitsu)

Surgical Capacity Optimization Solution Helps Hospitals Boost OR Utilization

An innovative solution has the capability to transform surgical capacity utilization by targeting the root cause of surgical block time inefficiencies. Fujitsu Limited’s (Tokyo, Japan) Surgical Capacity... Read more

Health IT

view channel
Image: First ever institution-specific model provides significant performance advantage over current population-derived models (Photo courtesy of Mount Sinai)

Machine Learning Model Improves Mortality Risk Prediction for Cardiac Surgery Patients

Machine learning algorithms have been deployed to create predictive models in various medical fields, with some demonstrating improved outcomes compared to their standard-of-care counterparts.... Read more

Point of Care

view channel
Image: The new eye-safe laser technology can diagnose traumatic brain injury (Photo courtesy of 123RF)

Novel Diagnostic Hand-Held Device Detects Known Biomarkers for Traumatic Brain Injury

The growing need for prompt and efficient diagnosis of traumatic brain injury (TBI), a major cause of mortality globally, has spurred the development of innovative diagnostic technologies.... Read more
Copyright © 2000-2024 Globetech Media. All rights reserved.