Indiana Makes First Move to Counter Medical Device Tax

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In a measure proposed by Indiana state Representative Kathy Heuer (R), state-level tax credits could be offered to offset the 2.3% federal excise tax facing the medical device industry, the Indianapolis Star reports.

Such a measure could cost Indiana between $3.9 million and $9.7 million annually, according to an estimate by the Indiana Legislative Services Agency. The measure would directly benefit companies like Cook Medical, Biomet, and Johnson & Johnson, all of whom employ large workforces in Indiana. Furthermore, Heuer intends to expand the state's research and development tax credit with another bill.

Heuer’s proposal could be the first of many state-level initiatives to counter the device tax as part of the "state-based competitiveness agenda" announced last week by the Advanced Medical Technology Association (AdvaMed) and the State Medical Technology Alliance (SMTA). The State Medical Technology Competitiveness Agenda outlines policy options to foster an attractive business environment for medical device manufacturers through tax credits and other incentives by the state.

Device manufacturers have long opposed the device tax, which has already cost the industry millions of dollars, and have expressed intentions to pass costs to consumers, cut back on jobs, and reduce investment until it has been successfully repealed.

As the industry lobbies to repeal the tax, state measures like Heuer’s can mitigate the immediate impact. It remains to be seen whether similar measures will be introduced in other states such as Minnesota and Massachusetts, where many medical device manufacturers are located.