Pending tax vexes ME's devicemakers

While the device-tax woes of Massachusetts' industry are well-documented, up in Maine, manufacturers are unsure how the 2.3% charge on sales will affect their middleman businesses.

Take Lighthouse Imaging, an ME-based optics manufacturer that does contract work with Stryker ($SYK) and other large companies. Lighthouse won't be directly taxed because it doesn't sell devices to physicians and patients, but CEO Mark Waite told Mainebiz that the 2.3% levy will reverberate down the value chain and affect companies like his.

"This [tax] will end up making the cost of goods higher, and since most of these medical devices are required, as opposed to being optional, that cost gets passed on to the consumer and the cost of care goes up," Waite told the publication. "It's certainly been a discussion point with some of the customers we work with."

Same goes for FHC, a Maine-based manufacturer of electrodes and neurosurgical components. The company stands to lose about 17% of its $10 million in annual revenue, CEO Keri Seitz told Mainebiz, which will cut into FHC's R&D spending. The cost will be passed down, Seitz said, from manufacturers to marketers to consumers, leading to a net increase in the price of healthcare.

Maine's device industry is worth about $693 million, employing around 1,700 people, according to AdvaMed.

Supporters of the tax, which is designed to pull in $30 billion over a decade, say the Affordable Care Act will create more insured customers thereby helping devicemakers recoup the charge with a sales boost. But the industry has almost unanimously rejected that assertion, and House Republicans concur, passing a repeal of the tax earlier this summer. Those efforts fell on deaf ears in the Democrat-controlled Senate, however, and the tax is expected to survive through its initiation date of Jan. 1.

- read the Mainebiz story

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