Smith & Nephew Cuts 100 Jobs, Blames It on Device Tax

Posted in Regulatory and Compliance by Bob Michaels on February 1, 2013

Smith & Nephew, a medical device manufacturer based in the United Kingdom, cut 100 jobs in the United States this past week. According to an article in The Memphis Daily News, the company was forced to lay off employees due to the recently-passed 2.3 percent medical device tax.

The layoffs took place at Smith & Nephew’s facilities in Tennessee and Massachusetts. In remarks made to The Memphis Daily News, Smith & Nephew SVP Joe Metzger said the company would not be able to isolate itself for the new excise tax on medical devices. The tax will impact sales of devices in the United States regardless of where they were made. Metzger also said that his company will not be able to avoid the negative impact of the tax.

Smith & Nephew is one of many companies to initiate layoffs in recent months. In the past few days, Boston Scientific announced that it would lay off an estimated 1,000 people due to budget constraints caused by device excise tax. Mike Mahoney, CEO of Boston Scientific, said the layoffs were in direct response to the company’s upcoming $75 million tax bill. In 2010, Stryker also announced that it would cut five percent of its total workforce.

The new tax has also impacted rates at some hospitals and GPOs. According to some purchasing groups, medical device manufacturers have increased the cost of their products through additional surcharges and fees.