The excise tax, which is a provision of the Patient Protection and Affordable Care Act, will require device manufacturers to pay a 2.3% tax on “taxable” medical devices, which excludes some devices such as contact lenses and hearing aids. AdvaMed said it is seeking to repeal the tax.
The study says that device manufacturers in the U.S. will be more likely to close plants and move operations overseas.
California, Colorado, Indiana, Massachusetts and Minnesota, which have a high numbers of residents employed by the medical device industry, will likely be affected, according to Diana Furchtgott-Roth, one of the report's authors, during a call with reporters.
“The device tax could cost thousands of jobs, depending on the cutback and what percent of the industry moves offshore,” Furchtgott-Roth said. “Given that we have also seen companies exiting anyway and moving jobs offshore, they are more likely to increase this when they have the tax.”
J.C. Scott, AdvaMed's senior executive vice president and director of bipartisan government affairs, said during the call that the “overall corporate tax burden, greater difficulty getting products approved [and] decreasingly competitive trade policy” also contribute to manufacturers' decisions to move some operations outside of the U.S.