Cameron Torti and Charles Goulding of R&D Tax Savers analyze the potential for MedAccred certification for 3D printing.
MedAccred, administered by the Performance Review Institute (PRI), is an accreditation that replaces several critical process supplier audits with one robust audit. The program’s aim is to ensure quality throughout the medical device supply chain, giving manufacturers an increased sense of confidence when choosing vendors. Process orientated audits are performed by industry approved experts who specialize in a particular process such as heat treating, sterilization, and plastic injection molding among others.
Mainly specializing in plastic injection molding with products such as beakers and test tubes, BMP Medical, located in Sterling, Massachusetts, is the first company to be accredited for using this process. Consequently, this makes BMP the preferred injection molder for the entire industry, a very significant differentiating factor and a major advantage for qualified suppliers like them. Large manufactures such as Johnson & Johnson will likely shift to sourcing almost entirely from MedAccred-certified companies. Ed Kangas, VP of Sales and Marketing, mentioned that the accreditation has “created new customer opportunities.” Robust quality control systems greatly reduce risk and increase value for suppliers.
In the coming years we should see a dramatic increase in the number of companies becoming or working toward MedAccred certification in order to remain viable options for their customers. New Jersey, a top 10 state in medical device manufacturing is one area where a rise in accreditations can be expected. The New Jersey statewide MedAccred expert at New Jersey Manufacturing Extension Program, Inc. (NJMEP) is Peter Russo.
3D Printing Opportunity
In January 2019, BMP opened a new 80,000-square-foot manufacturing facility in Massachusetts designed for injection molding and other packaging and assembly manufacturing services. Since then, designs have been made to further increase manufacturing capacity by 14-16 machines. In the past BMP has worked to develop new products for customers with the use of 3D printing. Although BMP traditionally partners with outside vendors for 3D printing, this new facility presents an opportunity for BMP to invest in its own printers.
Currently 3D printing is not a certifiable MedAccred process but PRI has announced that it may be eventually. Investing in and becoming familiarized with 3D printing before it becomes certifiable can be highly beneficial for medical device manufacturers such as MEP. If manufacturers can gather extensive experience in 3D printing, it can then be leveraged to initiate a first-mover advantage in the 3D printed medical supply chain once certification becomes available. Companies active in the 3D printing space are repeatedly eligible for the Federal R&D Tax Credit.
The Research & Development Tax Credit
Enacted in 1981, the now permanent Federal Research and Development (R&D) Tax Credit allows a credit that typically ranges from 4%-7% of eligible spending for new and improved products and processes. Qualified research must meet the following four criteria:
Must be technological in nature
Must be a component of the taxpayer’s business
Must represent R&D in the experimental sense and generally includes all such costs related to the development or improvement of a product or process
Must eliminate uncertainty through a process of experimentation that considers one or more alternatives
Eligible costs include U.S. employee wages, cost of supplies consumed in the R&D process, cost of pre-production testing, U.S. contract research expenses, and certain costs associated with developing a patent. On December 18, 2015, President Obama signed the PATH Act, making the R&D Tax Credit permanent. Beginning in 2016, the R&D credit can be used to offset Alternative Minimum tax for companies with revenue below $50MM and for the first time, pre-profitable and pre-revenue startup businesses can obtain up to $250,000 per year in payroll taxes and cash rebates.
Injection Molding, A Precursor To Additive Manufacturing
MedAccred certification is set to become all but required for suppliers in the medical supply chain. BMP, being an injection molder, is already enjoying perks of being the first company of its kind to be certified. Similar advantages will result for those employing additive manufacturing processes.