On March 9, the House Energy and Commerce Committee and the House Ways and Means Committee favorably reported out the American Health Care Act (AHCA) — the Republican Affordable Care Act (ACA) repeal legislation.  The AHCA includes a provision to repeal the medical device excise tax, which was originally enacted as a cost savings component of the ACA.  The bill will now go to the House Budget Committee, which will hold a markup hearing on the bill on March 15.  The political fate of the broader legislation is still to be determined, but to date, the device repeal provision has not encountered opposition.

The ACA’s medical device excise tax imposes a 2.3 percent tax on sales of medical devices (except certain devices sold at retail).  If the AHCA is signed into law, the medical device excise tax would not apply to sales after December 31, 2017.

Since its inception, there have been several bipartisan efforts to repeal or delay the medical device tax.  For example, in 2013, both the House and the Senate introduced bipartisan legislation to repeal the tax.  In December 2015, President Obama signed into law a two-year moratorium on the medical device excise tax as part of the Consolidated Appropriations Act of 2016.  The moratorium is set to expire on December 31, 2017.  See our previous coverage for more information on medical device tax legislative and regulatory activity.

The medical device tax repeal continues to garner bipartisan support and its inclusion in the AHCA is not expected to encounter significant opposition going forward.  The Congressional Budget Office recently estimated that the AHCA would reduce the federal deficit by $337 billion, so Congress would not need to rely on the medical device tax as an offset to generate revenue for the AHCA.  In the event that Congress does not enact repeal of the tax in the next few months as part of the ACA repeal and replace effort, repeal of the tax might resurface during consideration this summer of legislation to reauthorize the Medical Device User Fee Act (MDUFA).