Medical device manufacturers participate in research and development (R&D) activities regularly. However, some medical device manufacturers may be unaware that they can use their day-to-day activities to claim R&D tax credits. We discuss each activity and explain how it can be part of an organization’s R&D tax credit claim.
Activities must meet the IRS’ four-part test criteria, which include developing new or improved business components, eliminating uncertainty, experimentation, and technical nature.
Developing and designing new products
Medical device manufacturers constantly develop and design new medical devices. In addition, many manufacturers can improve their current lineup by redesigning products for better performance. Each stage of the development and design process, including creating concepts, prototyping, and the regulatory design phase fits the four-part test.
Implementing automation processes
Manufacturing companies that implement automation processes can qualify for R&D tax credits. Automating medical device manufacturing processes can improve speed, efficiency, and consistency while meeting increased product demand can make automation a wise investment for manufacturers.
Performing CAD modeling
Computer-aided design (CAD) has brought about new advancements in the medical device industry, including greater precision during the design process, simulation of different scenarios, material rendering, and the ability to test multiple designs before manufacturing a product. Moreover, manufacturers can utilize CAD modeling to redesign their current lineup.
Improving drug delivery systems
Creating new drug delivery systems may be necessary to deliver drugs to patients who cannot take medications through conventional methods. Implementing microneedle patches, ultrasound technology, and microchip technology can improve drug delivery to more patients.
Integrating telemedicine and telehealth features
Implementing telemedicine and telehealth features such as remote patient monitoring, visual aids, and medical data storage may improve devices. Furthermore, medical device manufacturers can create innovations to make features more user-friendly and improve the software.
Conducting tests to meet regulatory requirements
Medical device companies must test their devices to ensure they meet regulatory requirements from domestic and international regulatory bodies such as the FDA. Manufacturers can improve their products during clinical testing to meet regulatory requirements, such as changing materials or enhancing safety. Furthermore, changes or improvements to existing products to comply with new regulations count as R&D.
Incorporating 3D printing
3D printing is a relatively new technology that businesses can use to improve the manufacturing process of medical devices. It is handy for making devices that need to be customized to fit each patient, such as implants and prosthetics. Custom product printed versions will likely be improvements over traditionally manufactured versions.
There are even more activities medical device manufacturers can use to claim R&D tax credits, and, in some cases, determining which activities qualify can be challenging. MainStreet helps your organization by searching through every credit your business is eligible for. Contact us to start saving money!
