Despite numerous organizations nationwide applauding the recent Supreme Court ruling to uphold the Patient Protection and Affordable Care Act (PPACA), a new Kalorama report finds that the medical device industry may be feeling significantly more feverish regarding the recent healthcare ruling.

According to report officials, the industry will face additional costs due to a tax provision included in the act that is slated to take effect next year. 

These additional costs will likely be a health concern to the $322 billion world medical device industry, according to Kalorama Information. The PPACA law included new tax provisions intended to help fund healthcare reform, which will require device manufacturers to pay a 2.3 percent excise tax on "taxable medical device" sales beginning January 2013. The tax applies to medical device products diagnosed for human use, but exempts eyeglasses, contact lenses, and hearing aids, as well as devices that are "generally purchased by the general public for retail or individual use." 

Some companies have warned their investors of the charges they expect to pay in 2013 as a result of the tax:

• Johnson and Johnson, the largest device company, estimated that it will pay between $200-$250 million under the new law. 

• Teleflex stated it would face $15 million in charges. 

• Becton Dickinson said that 80 percent of its U.S. revenues would be subject to taxes.

[See also: SCOTUS: Individual mandate is a tax, constitutional.]

"These fees are not large compared to total revenues of the companies, but the burden of the fees is a concern for an industry that has been recovering from the recession," said Bruce Carlson, publisher of Kalorama Information. "It will affect costs and profits, may affect R&D spending and may encourage cost-saving options such as outsourcing more production."

Kalorama notes that the Medical Device Manufacturers Association (MDMA) and other groups have fought to reduce the target size of the tax, as well as the rate. The group is currently working to repeal or change the provision in the healthcare reform law. The efforts to repeal the tax have thus far been unsuccessful.

[See also: Supreme Court ruling retains individual mandate.]