Local Businesses Impacted by Possible Repeal of Medical Device Tax
As the new year approaches, it’s looking more likely that a medical device tax will be repealed. A repeal would impact dozens of medical device companies in the northwest suburbs.
The U.S House has already passed a bill eliminating the tax. The U.S. Senate could be next, which must act on a budget resolution by Dec. 20 to keep government operations running. Senate leaders from both parties have signaled a repeal is likely.
“I think we are just in the mechanics part now,” said Shaye Mandle, president and CEO of Medical Alley in Golden Valley. “We are optimistic.”
Northwest Suburbs a Med-Tech Hub
Golden Valley-based Medical Alley Association says there’s roughly 1,000 med-tech companies located in Minnesota, employing 450,000 people. It would make the state the most densely concentrated med-tech cluster in the world, Mandle said. Medical Alley also considers the northwest suburbs the heart of the state’s medical technology industry.
The medical device excise tax became law in 2013. The 2.3 percent tax on gross sales of medical devices was part of funding for the Affordable Care Act implemented by the Obama administration. Mandle says the tax affects 30 to 35 percent of the state’s medical economy.
Congress twice suspended the twice, buying companies some time. But officials in the industry consider that a temporary fix. They say a repeal needs to happen by Jan. 1 or the tax kicks in again in 2020.
Medical Alley: A Repeal Means More Jobs
Medical Alley says a total repeal would mean increased jobs and more investment in research and development. The industry group also says the tax forced some startup med-tech companies to go out of business.
“This every two-year cycle has required people to wait and see if they’re going to need to cut jobs.” Mandle said. “From a business predictability perspective we know we’ll see increased jobs, perhaps even capital investments by medical technology companies here in Minnesota.”