Could medicine mailed to California be exempt when an out-of-state pharmacist filled the prescription?

Plain-English summary

California concluded that a product otherwise qualifying as medicine could receive prescription-medicine treatment when an out-of-state pharmacist filled the prescription in accordance with the law of the state where the pharmacist operated. The pharmacist did not also have to satisfy California's registration requirements solely because the medicine was mailed to a California patient.

The facts involved an ophthalmic capsule prescribed by California ophthalmologists or doctors, processed under the supervision of pharmacists licensed in another state, and shipped directly to patients. The letter treated those sales as exempt under section 6369 but expressly declined binding-opinion status because the client was unidentified.

Common questions

Did the pharmacist need a California license under this opinion?

No for the stated tax-exemption analysis. The staff accepted registration and lawful dispensing in the pharmacist's operating state.

Was the opinion binding on the seller?

No. The letter expressly said it was not binding under section 6596 because the client had not been identified.

Citations and references

• California Revenue and Taxation Code section 6369(a)(1) — prescribed medicine filled by a registered pharmacist in accordance with law
• California Sales and Use Tax Regulation 1591(d) and California Business and Professions Code section 4037 — pharmacist definition discussed in the letter
• California Revenue and Taxation Code section 6596 — binding-opinion limitation stated by the staff

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/425-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/425-0163-100.pdf

Original ruling text

425.0163.100

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
916-324-5589
May 30, 1990
REDACTED TEXT
Dear REDACTED TEXT,
This is in response to your letter of March 20, 1990. You have requested our advice concerning whether your client's product is exempt from tax as a prescription drug or medicine. Facts Company A (hereinafter referred to as “taxpayer”), a REDACTED TEXT corporation, is selling a prescription drug or medicine to patients in the state of California from its place of business located in the State of REDACTED TEXT. The medicine will be prescribed by ophthalmologists or doctors in California to patients. Each prescription contains the following information:
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Name and address of the prescriber
Prescriber's license number
Name and quantity of the medicine prescribed
Date of issue
Directions for use
Name and address of the patient

The patient will mail an order form to the taxpayer, containing the abovereferenced information, along with a check or will pay by charge card, for either a onemonth, three-month or six-month supply of the medicine with the ability to reorder the same. The patient will be reexamined by the prescriber from time to time to determine the effectiveness of the medication and to adjust the dosage, if necessary. The order form will be processed at the taxpayer's place of business in REDACTED TEXT and the medicine will be sent to the patient by REDACTED TEXT. The processing activity will be under the supervision of pharmacists employed by the taxpayer, who are duly licensed by the REDACTED TEXT State Board of Pharmacy to engage in the practice of pharmacy. The specific medicine which is the subject of this ruling request is in capsule form and is intended to slow down and/or reverse the macular degeneration in the eyes. It provides an antioxidant protection to the eyes and helps to control the damaging effects of aging, ultraviolet light and other environmental factors on the eyes. The product

contains essential vital supplements such as Zinc Picolinate, L Cysteine, Manganese Gluconate, Beta Carotine and others. The medicine is prescribed by a person authorized to prescribe the medicine, an ophthalmologist or doctor, and it is dispensed by a registered pharmacist. Since the pharmacists are domiciled in REDACTED TEXT they do not, obviously, meet the licensing requirements of California Business and Professions Code section 4037, as required by Regulation 159l(d), but they do meet licensing requirements of Washington Business and Professions Code Section 18.64. Analysis Revenue and Taxation Code section 6369 provides, in pertinent part, that: “(a) There are exempted from the taxes imposed by this part the gross receipts from the sale, and the storage, use, or other consumption, in this state of medicines: “(1) Prescribed for the treatment of a human being by a person authorized to prescribe the medicines, and dispensed on prescription filled by a registered pharmacist in accordance with law.” Sales and Use Tax Regulation 1591 provides in paragraph (d) that a registered pharmacist is defined under Section 4037 of the Business and Professions Code as follows: “‘Registered pharmacist’ means a person to whom a certificate has been issued by the board, under the provisions of Section 4085, or a practicing pharmacist. Practicing pharmacists are persons who are registered as such, under Chapter 406 of the Statutes of 1905, relating to pharmacy, and who have paid all moneys due for renewal of registration, as required by that statute.” We are of the opinion that a substance or preparation otherwise qualifying as a medicine may qualify as an exempt prescription medicine under section 6369 as long as it is dispensed by a registered pharmacist in accordance with the law of the state where the pharmacist operates. As such, your client's sales of ophthalmic medicine through a pharmacist located in REDACTED TEXT state will be considered exempt sales of prescription medicine under section 6369. This is not a binding opinion pursuant to Revenue and Taxation Code section 6596 because your client is not identified. Should you wish a binding opinion, please write this office again, identifying your client. Very truly yours,

MCA:wak

Mary C. Armstrong
Senior Tax Counsel