Since the beginning of 2013, medical device manufacturers have paid a 2.3 percent tax on the sale of medical devices such as artificial hips and pacemakers to help finance the cost of the Affordable Care Act. According to the results from a recently released survey by the Advanced Medical Technology Association (AdvaMed), the medical device tax had a significant impact in its first year on jobs in the industry and investment in research and development (R&D).

In order to gauge the impact of the tax, AdvaMed surveyed companies in the medical device industry at the end of 2013. According to the survey results, “the tax has led to employment reductions of approximately 14,000 industry workers and forgone hiring of 19,000 workers.” Therefore, the total job impact of the tax on industry employment was approximately 33,000.

On the subject of R&D investment, the survey results revealed that over 30% of respondents reported reducing R&D investment as a result of the tax. Furthermore, almost 10% of respondents said they had relocated manufacturing outside of the U.S. or expanded manufacturing abroad because of the tax.

Upon a closer look at investment dollars, 75% of respondents indicated they had taken at least one of the following actions as a result of the tax:

  • Deferred or cancelled capital investments
  • Deferred or cancelled plans to open new facilities
  • Reduced investment in start-up companies
  • Reduced or deferred increases in employee compensation

If you would like the actual report, click here: Medical Device Impact Report


Ryan Lahti is the founder and managing principal of OrgLeader, LLC. Stay up to date on Ryan’s STEM-based organization tweets here: @ryanlahti