Health Care Tax Threatens Medical Device Manufacturers

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A tax on medical devices approved in 2010 as part of federal health care reform legislation would wipe out all of the profits Colorado Springs-based Spectranetics Corp. expects to make this year when the tax takes effect next year, a top company executive said Friday.

The medical laser manufacturer expects to earn between $1.5 million and $3 million this year, which the company would have to pay out beginning Jan. 1 under the new 2.3 percent excise tax on all medical device sales as part of the landmark Patient Protection and Affordable Care Act, said Guy Childs, chief financial officer of Spectranetics. If the tax were levied this year, the company would pay between $3.07 million and $3.14 million, based on its revenue estimate for this year of between $133.5 million and $136.5 million.

“We aren’t going to cut back on product development or clinical research, but as we think about investing in the future we will probably think twice and be able to do less of it,” Childs told about 120 business and civic leaders attending a panel discussion during a lunch hosted by the Colorado BioScience Association at the Cheyenne Mountain Resort. “This tax is another variable that detracts from our ability to invest in innovation because it comes right off the top line of our revenue. It impedes further investment and makes it more difficult.”

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One Response

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