Were hormone- or copper-releasing intrauterine contraceptives exempt despite being insert devices?

Plain-English summary

California treated three intrauterine contraceptives as exempt medicines when prescribed and furnished through one of the channels listed in section 6369. One device released hormones in the uterus, while two leached copper; the letter concluded that the chemical operation brought them within the medicine definition despite their device form.

Common questions

Did being an insert device automatically make the products taxable?

No. Their chemical operation supported medicine treatment.

Which mechanisms were addressed?

Hormone release and copper release within the uterus.

Was chemical operation alone enough?

No. The products also had to be prescribed and furnished in a manner listed in section 6369.

Citations and references

• California Revenue and Taxation Code section 6369 — qualifying prescription, physician, hospital, and treatment-sale channels applied in the letter

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/425-0245.pdf

Original ruling text

425.0245

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
916-322-6083

January 9, 1976

Ms. [A]
XXX --- ----- ---, -- XXXXX
Dear Ms. [A],
Your letter dated December 30, 1975 addressed to Mr. Charles Otterman has been referred to the undersigned for reply. You inquire as to the application of sales tax to sales of three specific contraceptives. We understand that all three contraceptives are insert devices prescribed by physicians. One,
[X], releases hormones into the uterus to prevent conception. Two of them, [Y] and [Z], leach copper into the uterus to prevent conception. Section 6369 of the Revenue and Taxation Code provides an exemption from tax for the sale of medicines when the medicine is: (1) Prescribed for the treatment of a human being by a person authorized to prescribe medicines and dispensed on prescription by a registered pharmacist; or (2)

Furnished by a licensed physician to his own patient; or

(3)
Furnished by a hospital for treatment of a person pursuant to the order of a licensed physician; or (4) Sold to a licensed physician or hospital for the treatment of a human being. “Medicine” is specifically defined to exclude articles in the nature of apparatus, contrivances, appliances, devices, or physical equipment. We are of the opinion that [X], when prescribed and furnished to a human being in the manner required, is a medicine within the meaning of the Sales and Use Tax Law, and is exempt from tax. It appears that the copper contraceptives operate chemically. We would consider that the

Ms. [A]

-2-

January 9, 1976
425.0245

definition of medicine is met, and sale of the copper contraceptives would be exempt from tax if they are properly prescribed and furnished. If you have any further questions, please contact us again. Very truly yours,

H. L. Cohen
Tax Counsel
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