The medical device tax scheduled to take effect in the next few weeks is causing consternation among medical device manufacturers who claim their existing reporting systems will require upgrades and modifications to collect and report the tax. They fear that the cost of modifying their systems, added to the cost of the tax itself, may push them into downsizing or other cost cutting measures, including cutting back on research and development funding.
A recent Advamed survey showed that only 8 percent of the companies polled felt that their existing systems could manage collecting and reporting for the new tax. Over 50 percent said they expect that complying with the tax will require major changes to their systems.
Advamed estimated that the changes will cost between $400 million to $667 million to implement. “While Washington talks about a fiscal cliff, this tax could push us off an innovation cliff, costing jobs and hurting our industry’s ability to find tomorrow’s treatments and cures,” said Stephen J. Ubl, CEO of AdvaMed.
Already, several companies are planning layoffs, reduced hiring and other cost cutting measures.
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