Medical device makers plan price increases to offset excise tax

Many medical device manufacturers expect to increase prices for products to offset the effects of a 2.3 percent excise tax scheduled to take effect in 2013, according to a recent industry survey conducted by global consultancy Emergo Group.

Proposed regulations recently issued by the Internal Revenue Service indicate that manufacturers of many types of durable medical equipment, prosthetics, orthotics and supplies available through Part B of Medicare may be subject to the tax.

Emergo Group surveyed 180 medical device industry CEOs, presidents and managing directors, and 53 percent of respondents said they would pass along some or all of any increased costs associated with the tax to customers. Another 37 percent of respondents plan to lower production costs without reducing staffing, according to the survey.

The excise tax is part of the Affordable Care Act, and applies to domestically produced or imported medical devices. Devices manufactured in the U.S. for export are exempted. The tax does not apply to eyeglasses, contact lenses, hearing aids, or any other medical device that the public generally buys at retail for individual use. A safe harbor is included for over-the-counter devices such as pregnancy tests, blood glucose monitors, test strips and lancets.