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2.3% Can Add Up – One Billion Dollars and Counting

Post: Jul. 19, 2013

The Affordable Care Act remains controversial as we approach the October 1st launch of the state exchanges.  Leaving aside (for the time being anyway) the employer mandate and the individual mandate one of the law’s least popular provisions reached a rather dubious milestone earlier this week. The excise tax collected by the IRS on medical devices surpassed the $1 billion mark.

The 2.3% tax went into effect on January 1, 2013.


The National Association of Manufacturing’s Emily Sternfeld, writing on the “Shopfloor” Blog points out: “The money thats going to taxes is money medical device manufacturers would have used to invest in R&D, their facilities and most of all – new jobs.”  She also points out that “this tax is not only a threat to innovation but also to the United States’ position as the global industry leader in medical devices.”

To remedy this situation the NAM is supporting the “The Protect Medication Innovation Act” legislation in the House, which currently has 253 co-sponsors, and its related Senate bill, “The Medical Device Access and Innovation Protection Act,” that was introduced on a bipartisan basis by Senators Klobuchar (D-MN.) and Hatch (R-UT) and currently has 34 co-sponsors.

The Hudson Valley is home to many medical device manufacturers and this tax is making it even more difficult to compete with firms in the EU, Japan and China.