1,000+ New Medtech Companies Will Pay Device Tax for First Time Starting in January

WASHINGTON, D.C. – More than 1,000 medical technology companies started after the device tax was last in effect (from 2013-15) will pay the excise tax for the first time in January if Congress fails to repeal or delay the tax, according to an AdvaMed analysis of the industry. 

“Think about that: more than 1,000 new medical innovators in just the last four years have opened their doors, many of them not yet profitable but all of them responsible for paying taxes on the very first device they sell in 2020,” said AdvaMed President and CEO Scott Whitaker. “And because this is a tax on revenue and not profit, some of these new companies will have to raise money or take out a loan just to pay the tax. Or they’ll have to lay off employees. Or cut R&D. It makes zero sense to place such a burden on those we should be encouraging, not penalizing, for producing the next generation of life-saving and -improving medical technologies.” 

According to information compiled by financial data firm PitchBook (based on public and private data sources), since the device tax was suspended in January 2016, 1,073 medical technology companies have been founded in the U.S. These start-ups would for have to begin paying the excise tax on any sales at the start of 2020 unless Congress acts. 

A recent analysis by the nonpartisan Tax Foundation found that the return of the medical device excise tax would lead to a loss of 21,390 U.S. medical technology jobs. Given that 80% of the medtech industry is comprised of smaller manufacturers, the bulk of those job losses would likely be from smaller companies.