In response to the medical device excise tax, slated to start in 2013, medical device companies plan to lay off workers, raise prices and lower costs, according to a PRMT survey.

The survey, which was presented Tuesday at MassMEDIC's annual conference, found that medical device companies plan to reduce operating expenses -- largely decreasing payroll, raising prices for customers and slashing the costs of products sold.

"The device tax itself is not of much news, but it's how companies are going to cope with it," Sharad Rastogi, PRTM director, told DOTmed News. "Some areas of concern are obvious: the device tax and 510(k) reform."

The 2.3 percent excise tax, which has prompted outcry from medical device companies, will tax U.S. sales of medical devices not sold over the counter. It's slated to raise $20 billion to help pay for health care reform.

Last month, Mark Leahey, president and CEO of Medical Device Manufacturers Association (MDMA) told DOTmed News that "the current structure would have a devastating impact on jobs for [small] companies, R&D budgets and the ability to bring new therapies to the table. If the issue isn't resolved, companies will move overseas or dry up."

But the survey found that companies don't plan to cut research and development, and they were evenly split on whether health care reform will increase the market for medical devices.

"People are trying to protect innovation spending," said Rastogi.

Leahey doesn't think that medical device sales will increase due to the influx of Americans gaining health coverage. According to the survey, 41 percent of the 100 C-level executives surveyed said they think health care reform will bring them more customers, while 42 percent don't expect a change.

The possibility of a change to the premarket notification - 510(k) - process, which is used by the FDA to approve products for commercial distribution, is another major concern uncovered by the survey.

Almost 70 percent of those surveyed said the existing 510(k) process is "adequate" and any changes could negatively affect medical technology innovation.

Rastogi pointed out that it's fairly clear how the device tax will play out, but there is uncertainty regarding possible changes to the 510(k) process.

"Nobody knows what form or shape it will take," he said. "It's causing some anxiety in the industry."

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