Was a prescribed electric-field device used to treat recurrent brain cancer exempt from Florida sales tax?

Plain-English summary

The Florida Department of Revenue concluded that a prescribed medical device using alternating electric fields to treat recurrent brain cancer was exempt from sales tax.

The system included an electric-field generator, cables, battery and power equipment, transducer arrays, and ancillary items. Patients paid a monthly consolidated charge, received the device after a certified physician wrote a prescription, and were trained to use it while their treating physician remained responsible for medical care.

The Department applied the medical-product exemption because the device was intended to treat human illness and was dispensed to an individual patient under a licensed practitioner's prescription.

What this means for you

Medical-device suppliers

Document the device's medical purpose, labeling and instructions, prescription process, and patient-specific dispensing. FDA prescription restrictions supported the represented facts, but the ruling's tax test came from Florida law and rule.

Billing teams

The exemption covered the described device and components in the consolidated patient charge when dispensed under the prescription process.

Common questions

Q: Was the device exempt?
A: Yes, when dispensed to a patient under an individual prescription.

Q: Why?
A: It was intended to treat human illness and met the rule's prescription requirement.

Citations and references

• Fla. Stat. §§ 212.08(2)(a) and 213.22
• Fla. Admin. Code r. 12A-1.020(6)(a) and (e)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 14A-013

Original ruling text

Executive Director
Marshall Stranburg

QUESTION: ARE THE SALES OF PRESCRIBED MEDICAL DEVICES USED IN THE
TREATMENT OF CANCER TUMORS EXEMPT FROM FLORIDA SALES TAX?
ANSWER: THE SALES OF PRESCRIBED MEDICAL DEVICES USED IN THE
TREATMENT OF CANCER TUMORS ARE EXEMPT FROM FLORIDA SALES TAX. THE
DEVICE IS INTENDED TO BE USED FOR MEDICAL PURPOSES TO TREAT HUMAN
ILLNESS. ADDITIONALLY, THE DEVICE IS DISPENSED TO PATIENTS PURSUANT TO
PRESCRIPTIONS WRITTEN BY LICENSED PRACTITIONERS. THEREFORE, THE
DEVICE IS EXEMPT FROM FLORIDA SALES TAX AS PROVIDED IN S. 212.08(2)(a),
F.S., AND RULE 12A-1.020(6)(e), F.A.C.
June 2, 2014
Re:

Technical Assistance Advisement – TAA 14A-013
Florida Sales and Use Tax
Medical Product
Section: 212.08, Florida Statute (F.S.)
Rule: 12A-1.020, Florida Administrative Code (F.A.C.)
Petitioner: XXXX(“Taxpayer”)
FEI#: XXXX
Business Partner Number: XXXX

Dear XXXX:
This letter is a response to your petition dated XXXX, for the Department's issuance of a
Technical Assistance Advisement ("TAA") concerning the above referenced petitioner and
matter. Your petition has been carefully examined and the Department finds it to be in
compliance with the requisite criteria set forth in Chapter 12-11, F.A.C. This response to your
request constitutes a TAA and is issued to you under the authority of Section (s.) 213.22, F.S.
FACTS
Taxpayer is a XXXX company dedicated to the development and commercialization of XXXX
treating field’s therapy. XXXX treating field’s therapy is for the treatment of cancer patients
with solid XXXX. XXXX treating field’s therapy is a low-toxicity treatment that uses lowintensity alternating electric fields to exert physical forces on the electrically charged
components of dividing cancer cells, which is intended to disrupt cell division and cause cancer
cell death.

Child Support Enforcement – Ann Coffin, Director  General Tax Administration – Maria Johnson, Director
Property Tax Oversight – James McAdams, Director  Information Services – Damu Kuttikrishnan, Director

www.myflorida.com/dor
Tallahassee, Florida 32399-0100

Technical Assistance Advisement
Page 2 of 5

XXXX treating field’s therapy is delivered via a treatment which allows patients to maintain
their normal daily activities while receiving continuous anti-cancer treatment. Taxpayer
developed the XXXX (“Device”), which is used to treat solid cancerous XXXX of the head. The
Device works by producing alternating electrical fields within the human body that are believed
to disrupt the rapid cell division exhibited by cancer cells. The alternating electrical fields are
applied to the brain through electrodes placed on the scalp. Device is used as a stand-alone
treatment for adults with confirmed gliobastoma or GBM that recurs (referred to as recurrent
GBM). The treatment is designed for continuous use throughout the day.
There are 3 primary components to the Device:
•
•
•

An electric field generator, connection cables, a portable battery, power supply, rack and
a power cord
INE transducer arrays
Ancillary items and accessories consisting of boxes, XXXX treating fields bags,
operations manuals and self-exchange kits

Patients pay a monthly fee for the Device and therapy, which is broken down into a charge for
the durable components and a monthly fee to purchase transducer arrays. To obtain Device,
certified physicians write a prescription for the patient and submit the prescription to Taxpayer’s
shipping facility located in New Hampshire. The prescription is filled, and the components of
Device are shipped to the closest local technical support staff specialist or to the certified
physician’s office. The patient will receive an agreement to review and sign once the patient is
trained how to apply the therapy himself or herself. The technical staff and the certified
physician are trained on how to administer the XXXX treating field’s therapy to the patient in
advance.
The day the patient starts treatment, the local technical support staff deliver the components of
Device to the patient, and they train and educate the patient on the proper way to administer the
treatment and the technical aspects of the XXXX treating field’s therapy. The patient is provided
with a user manual and technical support phone number. The patient then receives additional
training, guidance and treatment initiation from his or her physician. The on-going care of the
patient and the medical assessments are conducted by the treating physician. All medical
questions are referred to the treating physician.
It is the patient’s responsibility to request additional arrays. Taxpayer replaces batteries once
capacity falls below a certain threshold. After initial treatment starts, Taxpayer typically ships
arrays and other components directly to patients.
Taxpayer bills the patient’s third party insurance provider, managed care company or, in some
cases, the patient directly for Device. If a patient decides to discontinue the therapy, the patient
returns Device and any remaining supplies to Taxpayer at Taxpayer’s expense. As the arrays
cannot be reused, Taxpayer is responsible for collection and proper disposition of the arrays.

Technical Assistance Advisement
Page 3 of 5

Taxpayer provides a monthly invoice for Device that includes all equipment and transducer
arrays in one consolidated charge. You provided a sample invoice (Exhibit B), which reflected
the following:
ITEM#
XXXX

DESCRIPTION
XXXX

QTY
XXXX

UNIT PRICE
XXXX

LINE TOTAL
XXXX

The Food and Drug Administration (“FDA”) issues approvals for new drugs, biological licenses,
and pre-market approval (“PMA”) devices. The FDA’s website provides that there are three
classes of regulatory control for medical devices. The three device classes are based on the
degree of regulatory control necessary to ensure their safety and effectiveness. Medical devices
are classified into Class I, II, and III. Regulatory control increases from Class I to Class III. The
device classification regulation defines the regulatory requirements for a general device type.
Most Class I devices are exempt from Premarket Notification (510(k)). Most Class II devices
require Premarket Notification (510(k)), and most Class III devices require Premarket Approval.
Device is a PMA approved device. If a device requires the submission of a Premarket
Notification (510(k)), it cannot be commercially distributed until the FDA authorizes it.
The FDA’s website reflects a letter to Taxpayer which is date-stamped April 8, 2011. This letter
states, “We are pleased to inform you that the PMA for Device is approved.” The letter further
states, “The sale and distribution of this device are restricted to prescription use . . . The device
is further restricted . . . insofar as the labeling must specify the specific training or experience
practitioners need in order to use the device. FDA has determined that these restrictions on sale
and distribution are necessary to provide reasonable assurance of the safety and effectiveness of
the device. Your device is therefore a restricted device . . . .”
REQUESTED ADVISEMENT
Taxpayer is seeking guidance on whether its medical Device described above is exempt from
Florida’s sales tax.
APPLICABLE LAW AND DISCUSSION
Section 212.08(2), F.S., provides in part:
(2) EXEMPTIONS; MEDICAL.-(a) There shall be exempt from the tax imposed by this chapter any medical products and
supplies or medicine dispensed according to an individual prescription or prescriptions
written by a prescriber authorized by law to prescribe medicinal drugs; hypodermic
needles; hypodermic syringes; chemical compounds and test kits used for the diagnosis or
treatment of human disease, illness, or injury . . . .

Technical Assistance Advisement
Page 4 of 5

Rule 12A-1.020(6), F.A.C., provides in pertinent part:
(6) MEDICAL PRODUCTS, SUPPLIES, OR DEVICES.
(a) “Medical products, supplies, or devices” are any products, supplies, or devices that
are intended or designed to be used for a medical purpose to treat, prevent, or diagnose
human disease, illness, or injury. The purpose is assigned to a product, supply, or device
by its label or its general instructions for use. . . .
(e)Medical products, supplies, and devices are exempt when dispensed to a patient
according to an individual prescription written by a licensed practitioner.
Based on the facts provided above, the Device is intended to be used for medical purposes to
treat human illness. Additionally, the Device is dispensed to patients pursuant to prescriptions
written by licensed practitioners. Therefore, the Device is exempt from Florida’s sales tax as
provided in s. 212.08(2)(a), F.S., and Rule 12A-1.020(6)(e), F.A.C., when dispensed to a patient
according to an individual prescription.
CONCLUSION
Taxpayer’s Device is exempt from Florida’s sales tax as a medical device when dispensed to a
patient according to an individual prescription written by a licensed practitioner.
CLOSING STATEMENT
This response constitutes a Technical Assistance Advisement under S. 213.22, F.S., which is
binding on the Department only under the facts and circumstances described in the request for
this advice, as specified in S. 213.22, F.S. Our response is predicated on those facts and the
specific situation summarized above. You are advised that subsequent statutory or
administrative rule changes or judicial interpretations of the statutes or rules upon which this
advice is based may subject similar future transactions to a different treatment than expressed in
this response.
You are further advised that this response, your request, and related backup documents are public
records under Chapter 119, F.S., and are subject to disclosure to the public under the conditions
of S. 213.22, F.S. Confidential information must be deleted before public disclosure. In an
effort to protect confidentiality, we request you provide the undersigned with an edited copy of
your request for Technical Assistance Advisement, the backup material, and this response,
deleting names, addresses, and any other details which might lead to identification of the
taxpayer. Your response should be received by the Department within 10 days of the date of this
letter.

Technical Assistance Advisement
Page 5 of 5

If you have any further questions with regard to this matter and wish to discuss them, you may
contact me directly at 850-717-6363.
Sincerely,

Leigh L. Ceci
Tax Law Specialist
Technical Assistance & Dispute Resolution
Record ID: 166679