New Device Manufacturer Tax Could Increase Medical Device Outsourcing

A new tax on device manufacturers through healthcare reform could increase outsourcing of medical devices, according to a report by Kalorama Information.

The Patient Protection and Affordable Care Act institutes a 2.3 percent excise tax on "taxable medical device" sales starting on Jan. 1, 2013. The tax applies to devices intended for human use and exempts eyeglasses, contact licenses and hearing aids. MDMA and other groups fought to reduce the target size of the tax as well as the rate, but even the revised tax will have a significant impact.

The new tax — which could put additional pressure on margins — is expected to grow the $60 billion outsourced medical device market.

Read the CMIO report on the Kalorama Information study.

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