AdvaMed and a collection of healthcare groups have submitted separate comments to IRS regarding the implementation of the medical device tax, which is slated to go into effect in January 2013. While AdvaMed continues to work to have the device tax repealed, if the tax does go into effect, it hopes that IRS will implement the tax in a manner that considers the nuances and complexity of the medical device industry.
In recently submitted comments to the IRS and Treasury, AdvaMed shared its analysis of the influence of regulations for the medical device tax, which is a provision of the Affordable Care Act. “In these comments, we largely focus on our industry as certainly a unique industry to have an excise tax imposed on it with an innovation cycle that is different from other industries that are taxed under this sort of regime,” explained AdvaMed general counsel Andrew Van Haute in a recent press briefing. Namely, the device industry is much more complex, he explained.
The letter also mentions certain uses of devices that would be taxed that are not related to sales. “These are things like the provision of demonstration and evaluation units,” van Haute explained.
AdvaMed’s comments also cited their concerns related to rebates, which are a common form of pricing structure for the device industry.
The letter also urges the IRS to allow flexibility on constructive pricing rules. “These rules are highly complex and do not necessarily align with the types of distribution models and the types of sales that often occur in our industry,” van Haute said.
The retail exception to the tax is another item of listed in AdvaMed's letter to IRS. “We were encouraged by the track that the IRS is taking in not creating a list of exempt devices that will be sold at retail,” he said. “We did suggest a few substantive changes and tweaks to the framework they laid out and we also urged them to really give good guidance to their agents in the field to ensure that the guidance that they put out in the proposed rule doesn’t turn into a checklist and really allows their agents in the field to fully take into account all of the facts and circumstances when deciding whether a device should gain the benefit of a retail exception.”
A separate letter to IRS from the American Hospital Association, the Federation of American Hospitals, and a number of other healthcare groups expressed their desire to prevent the burden of the tax to be passed on to customers. The letter asked that the tax be implemented “in a manner that recognizes the ‘shared responsibility’ commitment from a broad group of key health care stakeholders, including medical device companies, to bring forward long-needed national health reform through passage of the Patient Protection and Affordable Care Act (‘ACA’).”
IRS will hold a public hearing on May 16 on the device tax.
Brian Buntz is the editor-at-large at UBM Canon's medical group. Follow him on Twitter at @brian_buntz.