• by bcarlson@marketresearch.com
  • January 29 2014


The Med Device Tax: From the Entrepreneur Point of View

The Med Device Tax: From the Entrepreneur Point of View

The Affordable Care Act included a now well-known tax on the medical devices industry. The tax was 2.3% on sales of FDA approved medical devices. A perspective on the impact of this tax and other changes on the device industry is provided by our analyst Mary Ann Crandall, who is also the owner of Spectron IR, a company that offers Thermal imaging systems (www.spectronir.com).  Spectron IR is a very small company and has been hit with extra fees and taxes that have been imposed on the medical device industry.  As Crandall notes, the impact is felt in more ways than just the assessment of the tax.

"There was the increase in fees for registration by the FDA which went from $2,000 to $3,300 in just one year," Crandall said. "This impacted not only manufacturers but repackagers, importers and more. I understand the FDA’s need for more oversight and funds to do so but that was quite an increase."

Then there is the medical device tax was enacted by the ACA, but Crandall notes it’s more than just the tax. "The paperwork alone is burdensome requiring extra cost for our CPA," she said.

Crandall notes that while the rationale for the tax was that there would be more people in the medical system that would create demand for products - this is not the case with many small companies’ products that deal in niche markets, where demand will simply diminish.

She also notes that the tax encourages US-based companies to sell overseas.

"The tax does not apply to goods that are sold out of the country which is encouraging my company to look to foreign markets rather than domestic markets," she said.

Crandall authors wound care, medical device, drug delivery and EMR market research reports for Kalorama Information. Information about her company Spectron IR is available at www.spectronir.com.


See Also MarketResearch.com’s blog about medical device areas growing despite the industry challenges.   http://blog.marketresearch.com/medical-devices-using-market-research-to-find-growth-areas