Device lobby fires back at hospital group over tax 'windfall'

While devicemakers have long opposed the impending 2.3% tax on sales and have made their case to Congress, they now have to deal with another opponent: Hospital reps who fear device companies will gouge customers to recoup the tax charge.

In a letter to the IRS this week, a group of hospitals warned the agency that devicemakers could turn the tax into a "windfall," hiking prices for products under the guise of offsetting the tax. "This strategy would allow device manufacturers to sidestep their responsibilities, while increasing the financial commitment of other stakeholders, including hospitals," the group wrote, as DOTmed reports.

The device industry's response was swift. "Only in Washington could paying a $30 billion tax over the next 10 years be viewed as a windfall opportunity, but that's exactly the false claim being made," said Gail Rodriguez, Executive Director of the Medical Imaging and Technology Alliance (MITA), in a statement.

The hospitals' case is this: If devicemakers can deduct the tax from their income, as is currently proposed, they can pass the cost of the payment down to customers and reap the ensuing profits, leaving them better off than before. Unsurprisingly, MITA finds this accusation absurd.

The 2.3% tax is part of the Affordable Care Act and isn't slated to take effect until 2013. The device lobby has been hard at work trying to get it overturned and has found some support of late, as 5 governors have pledged their support of repealing the tax.

- read DOTmed's report
- get more from MassDevice