Auld Lang Sigh: Medical Device Tax returns

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Now what?

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Posted by Joe Hage (Discussions: 3, Comments: 4)
Replied on January 3, 2018 12:00 am
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I really thought this would go away in light of all the other tax cuts issued last month. As is usually the case with economics, legislators don’t understand the details.
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Posted by Kris Simmons McCulloch (Discussions: 0, Comments: 5)
Replied on January 3, 2018 7:00 pm
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The device tax cut did not increase innovation, it solely let execs prop stock price through buybacks. Execs are increasing P/E by acquisition, not innovation. I know of no proof the tax holiday the device industry had created jobs, and no reliable numbers showing reinstating it would mean job loss.
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Posted by Ginger Cantor (Discussions: 0, Comments: 16)
Replied on January 3, 2018 7:00 pm
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Kris, if Congress could have ignored it, I think it probably would have gone away. But in this case, as I understand it, they had to actively repeal it, rather than actively reinstate it. So ignoring it meant it was reinstated.
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Posted by Julie O. (Discussions: 8, Comments: 316)
Replied on January 3, 2018 7:00 pm
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Ginger, the tax doesn't discriminate. The smaller companies and start ups who do the most of the innovations in the industry are the ones that usually suffer especially considering the investment climate.
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Posted by Clarisa Tate (Discussions: 0, Comments: 5)
Replied on January 4, 2018 7:00 pm
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The problem with the tax is that it's discriminatory (not put on pharma or others in healthcare), is levied on revenue (not profits), and hurts startup companies who are struggling to get to break-even while also having to prove value (by continued investment in studies after FDA approval). Medical device has already fallen out of favor with VCs because of the long and uncertain ROI. Digital healthcare, medical apps, medical software and the like are now preferred. The medical device tax is one more factor weighing heavy on the industry.
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Posted by Steve Maylish (Discussions: 0, Comments: 3)
Replied on January 5, 2018 7:00 pm
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I can't believe 2.3 percent has any effect given historical prices for medical devices.
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Posted by Roca Welch (Discussions: 0, Comments: 2)
Replied on January 5, 2018 7:00 pm
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Likely wasnt a part of the tax bill as it would have raised the deficit by more then 1.5 trillion and thus made them have to get around a filibuster. I would be surprised if this doesnt get eliminated via a spending bill or other means. It is playing tricks as politicians usually do.
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Posted by Derek Affonce (Discussions: 0, Comments: 1)
Replied on January 5, 2018 7:00 pm
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2.3 percent of revenue is huge! That could equate to as much as 20 percent or more of profit. Would you take 20 percent off your salary?
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Posted by Jörg Lorscheider (Discussions: 0, Comments: 1)
Replied on January 5, 2018 7:00 pm
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I have been in the device industry for over 30 years ... it is hard to believe the ignorant comments posted by intellectuals who never took to the trenches of entrepreneurialism . I see elitism that places the idiology of central government tax penalty policy over reality. Again, there are so many who are clueless about the delirious effect the unlawful tax mandate has had on 100Ks of Americans and worldwide.
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Posted by Steve Corsello (Discussions: 0, Comments: 2)
Replied on January 5, 2018 7:00 pm
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The hospital's are paying the tax with increased costs. Reimbursement on the decline device manufactures are running hospitals out of business. Many procedures just the Device costs more than the payment to the hospitals. At some point device prices need to match reimbursement or their won't be any customers. Charging one hospital double over another is commonplace.
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Posted by John P. Walker Jr. , AANG (Discussions: 0, Comments: 1)
Replied on January 5, 2018 7:00 pm
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I don’t think most people understand that unlike other taxes the med device tax is on gross revenues not net revenues. So if a company has $100MM in gross sales but only $3MM net it could face a tax that nearly wipes out its profitability. The genius state rep from my state, Nancy Pelosi said at the time the tax was implemented equated the med device tax to the tobacco industry like we are out to hurt the public? She also said since med device companies were benefiting from more people being insured then the industry should pay back into the system that benefited them like we are a quasi utility industry. Does that mean the defense industry should pay higher taxes as well for the reasons?
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Posted by Jay Evans (Discussions: 0, Comments: 1)
Replied on January 6, 2018 7:00 pm
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It will be eliminated sooner than later.
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Posted by Eugene VanArsdale (Discussions: 0, Comments: 1)
Replied on January 6, 2018 7:00 pm
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Steve Corsello, agreed, so far I've seen only ideological arguments brought to bear on both sides of the issue, probably because ideology tends to rush in to fill a void. I've yet to see anyone offer any compelling data to support a claim of any impact of this tax on anybody, positive or negative. Do you have any to share?
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Posted by Julie O. (Discussions: 8, Comments: 316)
Replied on January 7, 2018 7:00 pm
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Jay Evans, "most people" never heard of the device tax at all. Some questions that seem more on point to me are who needs to understand this, why do they need to understand it, do they understand it, and do they even care?
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Posted by Julie O. (Discussions: 8, Comments: 316)
Replied on January 7, 2018 7:00 pm
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As Jay Evans accurately states, the 2.3% tax penalty affects gross revenues . So this alone answers to any reasonable inquiry pertaining to the objective damage the mandate impugns . Most device companies operate at a 5-6% margin so it becomes clear to simple math the extent this unlawful burden cuts into the market. It represents an intrenched ideology that is undeniably overt. Julie, why don't you start contacting the manufacturers and hear first hand account of the billions which transferred into the special interest of the governing leviathan... Peace.
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Posted by Steve Corsello (Discussions: 0, Comments: 2)
Replied on January 7, 2018 7:00 pm
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2.3% regardless of profitability, paid quarterly. R&D budgets aren't happy!!
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Posted by Neil McLellan, MBA (Discussions: 0, Comments: 1)
Replied on January 8, 2018 7:00 pm
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