Daily Buzz

Nary a day goes by, it seems, that the US medical device industry and a cohort of commentators don’t rail against the medical device tax. The 2.3% tax on medical devices purchased from wholesalers was passed in 2010 by the US Congress to offset a portion of the US$1 trillion cost of the Patient Protection and Affordable Care Act (ACA), more widely known as Obamacare. It is set to take effect in 2013, unless the chorus of complaints causes the White House and legislators to reconsider.

The most recent critique is published by free-market think tank, the National Center for Policy Analysis. In a brief titled, “The Job-Killing Medical Device Tax,” the authors write that the tax “will destroy jobs and stifle innovation.” Many US device manufacturers share that view; some firms have already begun to pre-emptively make staff reductions. In November 2011, Stryker Corp. announced its intention to lay off 1000 workers in order to cut costs in advance of the tax.

Industry association AdvaMed, which has called for repeal of the tax, estimated that it "could could cost 43,000 American workers their jobs when it goes into effect."

However, a new survey conducted by global consultancy Emergo Group suggests that the rhetoric may not entirely reflect reality. When medtech industry CEOs, presidents and managing directors were asked how they plan to deal with the coming tax, nearly 53% said they would pass along some or all of the increased costs to customers and roughly 37% said they would lower production costs without reducing staffing. Less than 17% answered that they would resort to redundancies to absorb increased costs.

And so, the debate rages, and it probably will not quiet down until after the presidential election in November, if then.