Boston Scientific could be hit by reinstated medical device tax

While much of corporate America will enjoy a tax cut in the new year, one industry is getting a tax increase it has fought hard but so far unsuccessfully to avoid.

A 2.3 percent excise tax on medical device manufacturers went back into effect yesterday after a twoyear hiatus. It was originally imposed in 2013 as one of several taxes and fees in the Affordable Care Act that pay for expanded health insurance under the law.

The tax was strongly opposed by the $150 billion a year industry that produces everything from catheters to heart stents to artificial joints. In Congress, it was unpopular not only with Republicans but many Democrats from states like Massachusetts and Minnesota with large numbers of medical device companies.

Boston Scientific, a leading maker of heart stents and other devices, estimates reinstatement of the tax will cost the Marlborobased firm $75 million in 2018. The company said when the tax was suspended it invested the savings in projects including a partnership with the Mayo Clinic that combines manufacturing expertise with ideas from physicians for new products to help patients.

“The reinstatement of the device tax threatens continued investment in programs like these,” Boston Scientific said in a statement.

Congress voted to suspend the tax for 2016 and 2017 with the widespread expectation it would be abolished permanently before 2018. But various GOP efforts to repeal the Affordable Care Act and the taxes associated with it failed, and the sweeping federal tax overhaul recently signed by President Trump didn’t eliminate the medical device tax either.

Industry groups including the Advanced Medical Technology Association (AdvaMed) and the Medical Imaging and Technology Alliance warn the tax will take a $20 billion bite out of the industry over the next decade.

“What we have seen from past experience is that it comes out of funding for product development, research and the jobs associated with those things,” said J.C. Scott, AdvaMed’s head of government affairs. “We fear we will see employment freezes or reductions and a slowdown in the pipeline for medical innovation.”