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SMALL BUSINESS NEWS

15 Jun3  2012

 

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KILLING MEDICAL DEVICE TAX TO HELP SMALL BUSINESSES

On 7 June 2012 The U.S. House of Representatives voted to repeal the 2.3 percent tax on medical devices that is parts of President Barack Obama's healthcare law.  H.R. 436, “Health Care Cost Reduction Act of 2012” received bipartisan support in the House and will now go to the Senate.

The 2.3 percent excise tax is scheduled to take effect in 2013.  It applies to the sale of medical devices by manufacturers and importers. 

Industry association such as the Medical Device Manufacturers Association (MDMA) and Advanced Medical Technology Association (AdvaMed) applauds the House passage of legislation to repeal the medical device tax.  According to AdvaMed this would amount to a $30 billion excise tax on the medical device industry.

There were approximately 5,300 medical device companies in the U.S. in 2007, mostly small and medium-sized enterprises (SMEs).  In 2007, approximately 73 percent of medical device companies had fewer than 20 employees, with 15% having as many as 100 employees.  The industry employed more than 365,000 people in the U.S.

Medical device companies are located throughout the country, but are mainly concentrated in specific regions known for other high-technology industries, such as microelectronics and biotechnology.  The states with the highest number of medical device companies include California, Florida, New York, Pennsylvania, Michigan, Massachusetts, Illinois, Minnesota and Georgia.

This is an industry with high R&D investment.  It is more than twice the average for all U.S. manufacturers overall.

The largest markets for medical devices are the U.S. (which constitutes about half the world market), EU, Japan, Canada, China, Brazil, Taiwan, Korea and Australia.  

U.S. medical device manufacturers are the largest producers in the world for medical devices.  However,  continued shifts in trade patterns have resulted in China emerging as a significant export of lower tech equipment and supplies to the U.S.  The U.S. is now importing more medical devices than it is exported.  Additionally, many countries still maintain high tariffs on some medical products that results in reduce net sale price of medical devices. 

Sources

Medical Device Industry Assessment
H.R. 436


By Tim Miller

 

 

 

 

 

 
 

 

  
 

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