Iowa Administrative Code › Agency 701 - Revenue Department › Title III - Sales, Use, and Excise Tax › Chapter 220 - Exemptions Primarily of Benefit to Consumers › Rule 701-220.6 - Prescription Drugs, Medical Devices, Oxygen, and Insulin

Current through Register Vol. 47, No. 3, July 24, 2024
Sales of prescription drugs and medical devices as defined in
				  subrule 231.6(1) and dispensed for human use or consumption in accordance with
				  subrules 231.6(3) and 231.6(4) shall be exempt from sales tax. Rentals of
				  medical devices as defined in subrule 231.6(1) are also exempt from tax. The
				  sales price from the sales of any oxygen or insulin purchased for human use or
				  consumption (whether or not the oxygen or insulin is prescribed) is exempt from
				  tax.
(1)
Definitions.
"Medical device"
means durable medical
				  equipment or mobility enhancing equipment intended to be prescribed by a
				  practitioner for human use. See rule
				  701-231.8(423) for definitions
				  of those terms.
"Prescription drug"
means a drug intended to
				  be dispensed to an ultimate user pursuant to a prescription drug order,
				  formula, or recipe issued in any form of oral, written, electronic, or other
				  means of transmission by a duly licensed practitioner, or oxygen or insulin
				  dispensed for human consumption with or without a prescription drug order or
				  medication order.
"Ultimate user"
means any individual who has
				  lawfully obtained and possesses a prescription drug or medical device for the
				  individual's own use or for the use of a member of the individual's household,
				  or an individual to whom a prescription drug or medical device has been
				  lawfully supplied, administered, dispensed or prescribed. The phrase does not
				  include any entity created by law, such as a corporation or
				  partnership.
(2)
Tax
				exemption.
The sale of a prescription drug is exempt from tax only if
				the drug is intended to be prescribed or dispensed to an ultimate user. A drug
				is intended to be prescribed or dispensed to an ultimate user only if the drug
				is obtained by or supplied or administered to an ultimate user for placement on
				or in the ultimate user's body.
EXAMPLE A: A physician prescribes a tranquilizer for a
				  patient who is chronically nervous. The patient uses the prescription to
				  purchase the tranquilizer at a pharmacy. The purchase is exempt from
				  tax.
For purposes of this subrule, any drug prescribed in writing
				  by a licensed physician, surgeon, osteopath, osteopathic physician or surgeon,
				  or other person authorized by law to an ultimate user for human use or
				  consumption shall be deemed a drug exempt from tax if a prescription is
				  required or permitted under Iowa state or federal law.
EXAMPLE B: A common painkiller is sold over the counter in
				  doses of 200 milligrams per tablet. In doses of 600 milligrams per tablet,
				  federal law requires a prescription before the drug can be dispensed. Sales of
				  600 milligram tablets by prescription are exempt from tax.
EXAMPLE C: A federal law permits but does not require the
				  painkiller mentioned in Example B to be prescribed by a practitioner in dosages
				  of 200 milligrams per tablet. A practitioner might prescribe the painkiller in
				  the over-the-counter dosage, for example, to impress upon a patient the
				  importance of taking the drug. Sales of 200 milligram tablets by prescription
				  are exempt from tax.
See rules
				  701-231.7 (423) and
				  701-231.8 (423) for examples of
				  medical devices sold without a prescription but exempt from
				  tax.
(3)
Persons
				authorized to dispense prescription drugs or prescription devices.
In
				order for a prescription drug or device to qualify for an exemption, it must be
				dispensed by one of the following persons:
a.
				Any store or other place of business where prescription drugs are compounded,
				dispensed or sold by a person holding a license to practice pharmacy in Iowa,
				and where prescription orders for prescription drugs or devices are received or
				processed in accordance with pharmacy laws.
b. Persons licensed by the state board of
				medical examiners to practice medicine or surgery in Iowa.
c. Persons licensed by the state board of
				medical examiners to practice osteopathic medicine or surgery in
				Iowa.
d. Persons licensed by the
				state board of podiatry examiners to engage in the practice of podiatry in
				Iowa.
e. Persons licensed by the
				state board of dental examiners to practice dentistry in Iowa.
f. Persons licensed by the state board of
				optometry examiners as therapeutically certified optometrists.
g. Persons licensed by the state board of
				chiropractic examiners to practice chiropractic in Iowa, when dispensing in
				accordance with Iowa Code chapter 151.
h. Persons licensed as advanced registered
				nurse practitioners by the board of nursing when prescribing and dispensing in
				accordance with Iowa Code subsection
				147.107(8).
i. Any other person authorized under Iowa law
				to dispense prescription drugs or devices in this state.
j. Any person licensed in another state in a
				health field in which, under Iowa law, licensees in this state may legally
				prescribe drugs or devices.