With medical device manufacturers facing a 2.3 percent excise tax on sales

Beginning Jan. 1, 2013, the question comes up, “Who’s going to get stuck holding the bag?” Will manufacturers take the hit to their bottom line?

Will they try to pass along the cost of the tax to buyers? Or will buyers and sellers come together to create efficiencies that will reduce the pain that the tax may inflict on any one member of the supply chain?

The healthcare reform law gave the Internal Revenue Service the authority to impose a 2.3 percent excise tax on the sale of any taxable medical device by a manufacturer, producer, or importer.

The tax, which will be collected starting Jan. 1, 2013, is projected to generate approximately $20 billion over 10 years and is intended to be the medical device manufacturing community’s “contribution” to healthcare reform.

The law exempts eyeglasses, contact lenses, hearing aids, and “any other medical device determined by the Secretary to be of a type which is generally purchased by the general public at retail for individual use.”

Like so many things emanating from Washington, the tax could be considered more a work in progress than a done deal. In fact, there’s some question as to whether the law will actually survive at all. At press time, there were numerous bills floating around Congress to repeal it.

Article Source: Repertoire Magazine Publisher Blog.