On Monday March 4, the House Energy & Commerce leaders sent a letter to FDA regarding whether the medical device tax would be applied to smartphones, tablets, and apps. Since then, it has become an overblown game of telephone throughout the media as to what this means for mobile device makers and who would get the tax. The argument has been that these tech companies are so small that they wouldn’t be able to take the tax.

The truth? There is little reason, under the current shaping to the tax, to be concerned. It’s yet another question from people who really don’t understand the medical device industry and the issues that are faced, not to mention those who don’t know what the medical device tax actually is. 

As it has been discussed previously, the 2.3% tax on medical device makers has been the pain in the side of many companies, both big and small. There are plenty of challenges on Capitol Hill and from some of the bigger industry players to repeal it, but there has been no progress. Now, almost like a scare tactic, this push to extend the tax beyond its limitations shows up.

According to the IRS, a taxable medical device is listed as a FDA device under section 510(j) of the Federal Food, Drug, and Cosmetic Act and 21 CFR part 807. However, there are exemptions to the tax, such as eyeglasses and hearing aids, but there is also an exemption for devices that are purchased at retail for individual use. Smartphones and tablets would seem to fall into this category. 

Certain apps, such as those developed specifically for clinical use might fall under the statute. However, those few apps that do qualify as medical devices and fall within the realm of the tax, not be purchased by everyday users.

There is no final word yet in Washington as to whether or not they are considering the question from the House Energy and Commerce leaders. However, it seems like that, until we can implant an iPhone into our hips, a smartphone would not qualify as a taxable medical device under FDA regulation.

Reina V. Slutske is the assistant editor for MD+DI.