In the coming years policy makers under U.S. President Trump’s administration will be dealing with a number of important policy issues. 

Here are just a few of President Trump’s policies which might affect the Medtech industry:

1. The Affordable Care Act; Repeal and Replace

An Executive Order

Just hours after being sworn in as the 45th President of the United States, President Trump signed an executive order giving federal agencies the authority to grant waivers, exemptions and delays of provisions in the Affordable Care Act (ACA, also known as Obamacare) that could pose a “fiscal burden” on state, drug companies, individuals and insurers. It is not yet clear what affect this will have on the ACA. It may remove the legal requirement on individuals to carry health insurance or face fines. The executive order however may not have much impact for 2017 as contracts have already been signed with insurance companies that incorporate government rules for this year. Nonetheless, it introduces a new level of uncertainty into the health insurance market.

Repeal and Replace

President Trump cannot completely repeal the ACA with executive action as it has been set in regulation. However, with Republicans in control of Congress and the White House, a full repeal of Obamacare in the future is seen as a very real possibility. According to Larry Biegelsen, a senior analyst at Wells Fargo, any truly meaningful action on these issues may be delayed to the second quarter of 2017 as the process of putting together this legislation will require substantial coordination among House and Senate Republicans and the new Trump Administration which may be further delayed due to the lack of a consensus around what should take its place and how quickly that transition should be made.

Many questions surround a “repeal and replace” of the ACA, such as, what will happen to those currently insured? Will there be changes to Medicaid and Medicare? Will there be a decrease in the number of people insured or the number of patients getting procedures that use devices?

Whatever direction the Trump administration ultimately takes, it’s rational to believe that the way hospitals think about their bottom line will be directly influenced by the uncertainty around ACA reform. We may see this have a knock-on-effect on hospital purchases, resulting in more pushback on prices and some reductions in spending.

2. Medtech Tax; A Permanent Repeal

A potential benefit of ACA reform to the Medtech industry is the permanent suspension of the Medtech tax. First introduced when the ACA was initially implemented, a 2.3% tax was placed on US medical device sales with the expectation that the implementation of the ACA would increase the volume of patients getting procedures that use medical devices. This increase never truly came into fruition. It was argued that the tax was in fact a significant drag on medical innovation, resulted in the loss or deferred creation of jobs, reduced research spending, and slowed capital expansion. The tax was ultimately suspended for two years in 2015.

While, there is generally bi-partisan support toward suspension of the medical device tax, according to industry executives, lobbyists and lawmakers a Republican administration with Trump at the helm would be more likely to make the two-year suspension of the tax permanent in a complete repeal.

3. Corporate Tax; Reform
Corporate tax reform was a key tenant of President Trump on the campaign trail, who indicated he is heavily in favour of a lower US statutory rate of 15%, interest deductibility and repatriation. It remains to be seen what corporate tax reforms might actually look like, if such a bill will pass and if it did, how a tax reform might impact the Medtech market.
Were corporate tax moderation to be implemented under a Trump regime, companies that hold the majority of their manufacturing operations in the U.S., may benefit most from tax reform.

What is to Come?
What will come of Trump’s presidency is yet to be seen, but one thing is for sure the medical device industry and the healthcare market overall should brace themselves for change.

This Article is brought to you by Synecco

About Synecco

Synecco founded in 2004 and located in Galway, is a global supplier of world-leading contract manufacture and design solutions for the medical device market. Synecco have proven to be the partner of choice for many medical device companies seeking design and engineering, component manufacture and assembly, as well as supply chain management solutions. Synecco is fully compliant to industry standard ISO 13485 focused on developing and supplying innovative medical device solutions for our partners. Synecco has a diverse commercial client portfolio, from large MNC’s to well-funded start-ups.

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