The Medical Imaging & Technology Alliance (MITA) today submitted comments to the Internal Revenue Service (IRS) regarding the implementation of the new excise tax on medical devices as enacted by the Health Care and Education Reconciliation Act of 2010.
"The device tax imposes a serious burden on imaging and radiotherapy manufacturers, that are already operating in an extremely competitive global marketplace," said David Fisher, Executive Director of MITA. "It is critical that the implementation of the tax incorporates the unique nature of the medical imaging and radiation therapy industry so as not to hinder manufacturers' ability to bring innovative diagnostics and therapy to market. Thoughtful implementation is necessary."
The imaging and radiation therapy industries have unique characteristics that will require careful consideration in many aspects of the regulatory process. For example, medical imaging and radiation therapy equipment is often considered capital equipment, as it is reusable and can last for many years.
The device tax creates two issues for capital equipment:
- First, end-customers may choose to purchase service contracts including replacement parts to maintain functionality. The replacement of component parts of a machine which has already been taxed should not be taxed a second time.
- In parallel, leases of this equipment should not be put at a disadvantage by applying the entire tax at the beginning of the lease. The device tax should be imposed on the final sale of the equipment to the end-user customer to match the tax expense with the sales revenue.
The IRS must also ensure that the implementation of the tax does not create an uneven playing field in which FDA-registered manufacturers are put at a competitive disadvantage when selling their products compared to others in the marketplace who resell these products.
Source:
Medical Imaging & Technology Alliance (MITA)