Congress Gives Device Makers a Break from Excise Tax

Marie Thibault

The votes are in and legislators in both the House and the Senate have passed a major tax deal that includes, among many other measures, a two-year suspension of the 2.3% medical device excise tax. The next stop for the bill is President Obama's desk and political media outlets report he will sign the tax deal into law.

Representatives in the House agreed to the tax bill on Thursday, 318-109, while senators voted it through on Friday morning, 65-33. The tax bill was passed in tandem with a $1.1 trillion spending deal as Congress heads into its holiday recess.

Once signed by President Obama, the tax bill could go into effect as soon as next month. 

As expected, industry proponents were quick to applaud the move and look toward a next hope: a permanent repeal. In a press release, Scott Huennekens, president and CEO of Verb Surgical and chairman of the Medical Device Manufacturers Association (MDMA), said, "MDMA has fought against this misguided policy since it was first proposed in 2009, and while suspension of the medical device tax is a positive step, we will remain focused on repealing a policy that only serves to punish a vital sector of America’s innovation ecosystem."

Joanne Wuensch, an analyst with BMO Capital Markets, wrote in a published note Friday that for her research coverage universe of medtech companies, implementation of the tax suspension should be "a positive event" that would increase earnings per share for a number of companies. She added, "In question, is how much the companies let fall through to the bottom line, or if they use it to increase R&D and SG&A, assist in merger integration and debt retirement, or any combination of the above."

Marie Thibault is the associate editor at MD+DI. Reach her at [email protected] and on Twitter @medtechmarie. 

[Image courtesy of JESADAPHORN/FREEDIGITALPHOTOS.NET]