Medical Device Tax Will Lead to Higher Prices, Not Layoffs, Says Emergo Survey

Will a proposed 2.3% excise tax on medical device sales result in massive layoffs, as industry advocates have warned? Maybe not, according to a new survey conducted by global consultancy Emergo Group. It asked 180 medtech industry CEOs, presidents and managing directors how they plan to deal with the coming tax. Nearly 53% of respondents said they would pass along some or all of the increased costs to customers and roughly 37% said they would lower production costs without reducing staffing. Less than 17% answered that they would reduce headcount to absorb increased costs.

Approximately three quarters of the respondents represent companies with fewer than 50 employees, which constitute the vast majority of medical device firms, notes Emergo in a press release issued today.

Industry association AdvaMed, which has called for repeal of the tax, estimated that it "could could cost 43,000 American workers their jobs when it goes into effect."

— Norbert Sparrow