The recent U.S. Healthcare Reform legislation has promised a lot of things, but higher taxes for the medical device industry was not on local companies’ the radars. Currently, the legislation proposes a $4 billion annual income tax for medical device manufacturers that would be collected over the next 10 years in an amount that would total $40 billion. Many Indiana manufacturers are concerned that the proposed tax could take a heavy toll on our medical device prominent state.

Leaders at medical device manufacturers such as Cook Group, Zimmer, DePuy, and Biomet argue that they’d be “paying twice” for the cost of health care reform. Not only will they face the income tax proposed in the legislation, but they also argue that because they are paid by hospitals who will be looking to cut costs as they feel the burden of the health care reform. Listen here.

Roughly 3.5% of the top-line revenue of medical device companies will be taxed, which includes 20-30% of their total profits. These cuts in profits will ultimately lead to cut backs in R&D and manufacturing. With a decrease in R&D and manufacturing, we will see less innovation and more job layoffs.

We encourage all of you reading this post to contact your Congresspersons and and express your concerns about the healthcare reform and medical device tax being proposed.