AdvaMed survey details the negative impact of the medical device tax

by Lauren Dubinsky, Senior Reporter | January 28, 2015
The Advanced Medical Technology Association (AdvaMed) released the results of a survey today investigating the impacts of the medical device tax after two years. The survey was conducted from November 20 to December 12 and included 55 AdvaMed member companies.

It found that about 18,500 employees were let go as a result of the tax and that the companies will forgo hiring 20,500 new employees over the next five years. Just under half of the companies would consider firing additional employees if the tax is not repealed, but 71 percent would start hiring again if the tax was repealed.

In addition, 53 percent of the companies reported that they reduced R&D and 58 percent would consider additional or first-time reductions if the tax remains in effect. But 85 percent stated they would restore R&D or make new investments in R&D if the tax is repealed.

AdvaMed conducted the same survey last year, which was a year after the tax went into effect. They noted that the negative impact of the tax has increased since then – 30.6 percent of the companies reduced R&D and 14,000 jobs were lost last year.

"It makes it clear that the passage of time has only added to the negative effect of this burdensome tax on American jobs and R&D – the very building blocks of our country that are needed to discover the treatments and cures of tomorrow," Stephen J. Ubl, president and CEO of AdvaMed, said in a conference call.

Other than job cuts and loss of R&D, the companies have been affected in other ways by the tax. Three-quarters of the companies reported that they have deferred or cancelled capital investments, deferred or cancelled plans to open new facilities, reduced investment in startups, had a hard time raising capital, or reduced or deferred increases in employee salaries.

In the weeks ahead, AdvaMed plans to share the results of the survey with policymakers "across the political spectrum."

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