Medical Device Manufacturers Find Joy in Controversial American Health Care Act

23 March 2017 (Last Updated March 23rd, 2017 18:30)

Although many people in the US have doubts about the bill’s ability to provide affordable healthcare access, medical device companies received a major win in the AHCA’s permanent repeal of the medical device excise tax.

Medical Device Manufacturers Find Joy in Controversial American Health Care Act

The much discussed and anticipated Republican response to former President Obama’s Patient Protection and Affordable Care Act (ACA), known colloquially as Obamacare, is a “repeal and replace” bill that was publically released on 6 March. The American Health Care Act (AHCA) drawn up by President Trump’s administration aims to replace the ACA as the legislature governing US healthcare, and has been met with skepticism from both major political parties. Although many people in the US have doubts about the bill’s ability to provide affordable healthcare access, medical device companies received a major win in the AHCA’s permanent repeal of the medical device excise tax.

Originally implemented in January 2013 as part of the ACA, the medical device excise tax imposed a 2.3% tax on the domestic sales of medical devices, to be paid by the device manufacturer or importer. Intended to generate funds to support the ACA, the tax instead caused a number of negative effects for domestic device manufacturers, including job layoffs and cuts to R&D efforts, stifling innovation and the growth of small device companies. Intense lobbying efforts from manufacturers eventually led to a two-year moratorium on the tax, effective 1 January 2016.

Despite this temporary repeal of the tax, medical device manufacturers continued to worry about the tax’s eventual return and about its future effect on growth and innovation. The permanent repeal proposed in the AHCA has led to a sigh of relief from manufacturers, particularly small companies that struggled under the 2.3% tax. The AHCA is in line with President Trump’s campaign promise to return jobs to the American workforce, as it will allow companies to designate more capital towards the development of innovative devices and treatments to help the American population.

However, with the tax repeal comes a new set of problems. Critics of the bill worry that the AHCA will restrict many Americans from affordable healthcare, and thus limit the number of patients able to access innovative medical devices. Additionally, the bill denies significant funding to certain organizations, such as Planned Parenthood, which provides access to contraceptive devices. Medical device manufacturers are rejoicing in the moment, but the effect of the AHCA on access to and demand for medical devices remains to be seen.