CBO: US Device Excise Tax Repeal would Cost $30 Billion over Ten Years

Ahead of highly anticipated US Congressional votes to repeal the planned 2.3% medical device excise tax, an analysis by the Congressional Budget Office anticipates $29.1 billion in lost federal revenues through 2022 if the repeal goes into effect.

The tax is set for implementation in January 2013, but the US House of Representatives will likely vote for repeal as early as this week. (How the medical device tax repeal would fare in the Senate is a bigger unknown, and the Obama administration would certainly veto the measure.)

The CBO analysis follows a Morgan Stanley report (via MassDevice.com) calling long odds on House Republicans’ chances of passing a repeal this year. The financial services firm sees a 30% chance that Congressional repeal efforts will succeed this year.

Nonetheless, the US medical device industry continues to argue that implementation of the excise tax will lead to layoffs and stifled innovation—an argument apparently supported by many legislators from states with sizeable medical device industries. Emergo Group research from late 2011, however, indicates that many small- and mid-tier medical device manufacturers plan to raise prices rather than curtail research and development or reduce headcount.

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