AdvaMed Study: Medical Device Excise Tax Would Be Terrible

A new study funded by US medical device industry lobbying group AdvaMed anticipates job losses, hampered innovation and higher prices for consumers if a much-maligned 2.3% excise tax goes into effect as planned in 2013.

Authored by conservative husband-and-wife team Diana and Harold Furchtgott-Roth, the study claims that “under reasonable assumptions” the US medical device industry could see job losses of more than 43,000 as well as $3.5 billion in employment compensation losses. The study also warns that US medical device manufacturers will be more inclined to shut down domestic operations in favor of off-shoring as a result of the excise tax’s implementation, and that foreign manufacturers will gain the competitive edge at US firms’ expense.

US states bearing the brunt of such developments would include California, Florida, Illinois, Indiana, Massachusetts, Minnesota, New Jersey, New York, Ohio, Pennsylvania, Texas and Wisconsin—all of which have medical device sectors employing more than 10,000 people, according to the study.

The Furchtgott-Roths argue (with more heat than light) that the excise tax will drive up prices for medical devices, requiring consumers and health care providers to pay more for these products and eventually driving down demand. “Excise taxes are known to be inefficient,” they write. (They cite no sources, however, for that contention.)

The study’s key arguments fall neatly in line with those made by other industry-sponsored groups against implementation of the excise tax. Given the traction this issue has gained among US lawmakers, preventing the tax from taking effect is a real possibility. 

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