Date: December 16, 2015
Contact: Liz Novak, Director of Marketing and Communications, +913.345.1005
IAPD Applauds Medical Device Tax Suspension
Overland Park, KS — The International Association of Plastics Distribution (IAPD), its Government Relations Committee and its members in the performance plastics industry are pleased that the United States Congress has suspended for two years the 2.3 percent medical device tax. This tax went into effect on January 1, 2013 as part of the Affordable Care Act. It is IAPD's hope that Congress will eventually make this suspension permanent, allowing IAPD members and their customers to have the regulatory certainty that will allow this industry to grow and employ more Americans. IAPD is proud to have been an integral player in a coalition with the Medical Device Manufacturers Association in gaining legislative approval for its repeal.
The tax required medical device manufacturers, many of whom are IAPD members or their customers, to pay the Internal Revenue Service a 2.3 percent tax on sales - not profits - which is an estimated average of US$194 million per month. It inhibited access to medical devices and has had an adverse effect on the medical device industry, which employs an estimated 400,000 people.
As U.S. Representative Elise Stefanik (R-NY-21) said in a letter to Speaker Paul Ryan in November, "The medical device tax is a tax on revenue, rather than profit, which means that the U.S. device industry is subject to one of the highest corporate tax rates in the world. As you know, American companies represent 38 percent of the global market and this tax threatens our nation's ability to innovate and stay competitive. Additionally, American companies must pay the tax even in non-profitable years. As companies look to make cuts to offset the tax, research and development is often one of the first items to go. This trade-off undermines the future of the industry and puts the discovery of new breakthrough medical technologies at risk."
"This is a major victory for IAPD's government relations initiative. The performance plastics industry as well as IAPD has been lobbying for this action, because we see great opportunity for performance plastics in medical devices," said IAPD President Kevin Short. "Performance plastics are already vital to so many medical applications that it's hard to imagine any medical facility without an abundance of these materials. Performance plastics are necessary components of incubators that keep premature infants alive, antimicrobial knee and hip replacements, surgical instruments, hospital beds, pacemaker leads, X-ray and MRI machines, IV and infusion devices and many, many more applications. IAPD's members make, distribute and fabricate the performance plastics that make all of this life-saving equipment possible. The 2.3 percent tax was a tremendous burden on our members and it had a detrimental effect on research and development. Our industry is involved in exciting and innovative developments, which are improving life in a multitude of industries, including the medical profession. Our members can now, at least for the next two years, continue to innovate without the undue burden of this tax. We encourage Congress to make this suspension permanent."
Performance plastics excel in medical applications because they maintain their physical properties under thermal, chemical or electrical stress, can handle repeated sterilization, are light weight, offer excellent wear properties and meet health regulations. They are often the best, most cost-effective material for a medical application.
The International Association of Plastics Distribution (IAPD),
established in 1956, brings together distributors, fabricators,
manufacturers, manufacturers’ representatives, recyclers and service
providers in an environment which encourages a free flow of ideas and
information that help members build their businesses. Every program and
service we provide is designed with the simple goal of helping our
members increase profitability. Membership in IAPD is an affordable
business investment. IAPD provides training, connections with customers
and suppliers and information about developments that impact the
industry. What makes IAPD unique is a commitment to educating customers
and other key end-users about plastics. In other words, IAPD works with
members to build the demand for plastics. Central to this effort is the
reinforcement of the value of distribution.