(a) Definitions.
(1) Administer. "Administer" means the direct
application of a drug or device to the body of a patient or research subject by
injection, inhalation, ingestion, or other means.
(2) Dispense. "Dispense" means the furnishing
of drugs or devices upon a prescription from a physician, dentist, optometrist,
or podiatrist. Dispense also means and refers to the furnishing of drugs or
devices directly to a patient by a physician, dentist, optometrist, or
podiatrist acting within the scope of his or her practice.
(3) Furnish. "Furnish" means to supply by any
means, by sale or otherwise.
(4)
Health Facility. "Health Facility" as used herein has the meaning ascribed to
the term in section
1250
of the Health and Safety Code, and also includes "clinic" as defined in
sections
1200
and
1200.1
of the Health and Safety Code.
(A) Section
1250
of the Health and Safety Code provides that "health facility" means any
facility, place or building that is organized, maintained, and operated for the
diagnosis, care, prevention, and treatment of human illness, physical or
mental, including convalescence and rehabilitation and including care during
and after pregnancy, or for any one or more of these purposes, for one or more
persons, to which the persons are admitted for a 24-hour stay or
longer.
(B) Section
1200
of the Health and Safety Code provides that "clinic" means an organized
outpatient health facility which provides direct medical, surgical, dental,
optometric, or podiatric advice, services, or treatment to patients who remain
less than 24 hours, and which may also provide diagnostic or therapeutic
services to patients in the home as in incident to care provided at the clinic
facility. A place, establishment, or institution which solely provides advice,
counseling, information, or referrals on the maintenance of health or on the
means and measures to prevent or avoid sickness, disease, or injury, where such
advice, counseling, information, or referrals does not constitute the practice
of medicine, surgery, dentistry, optometry, or podiatry, shall not be deemed a
clinic for purposes of this subdivision.
(C) Section
1200.1
of the Health and Safety Code provides that "clinic" also means an organized
outpatient health facility which provides direct psychological advice,
services, or treatment to patients who remain less than 24 hours. As provided
in section
1204.1
of the Health and Safety Code, such clinics serve patients under the direction
of a clinical psychologist as defined in section
1316.5
of the Health and Safety Code, and are operated by a nonprofit corporation,
which is exempt from federal taxation under paragraph (3), subsection (c) of
section 501 of the Internal Revenue Code of 1954, as amended, or a statutory
successor thereof, and which is supported and maintained in whole or in part by
donations, bequests, gifts, grants, government funds, or contributions which
may be in the form of money, goods, or services. In such clinics, any charges
to the patient shall be based on the patient's ability to pay, utilizing a
sliding fee scale. Such clinics may also provide diagnostic or therapeutic
services authorized under chapter 6.6 (commencing with section 2900) of
division 2 of the Business and Professions Code to patients in the home as an
incident to care provided at the clinic facility.
(5) Pharmacist. "Pharmacist" means a person
to whom a license has been issued by the California State Board of Pharmacy,
under the provisions of section 4200 of the Business & Professions Code,
except as specifically provided otherwise in chapter 9 of the Pharmacy
Law.
(6) Pharmacy. "Pharmacy" means
an area, place, or premises licensed by the California State Board of Pharmacy
in which the profession of pharmacy is practiced and where prescriptions are
compounded. Pharmacy includes, but is not limited to, any area, place, or
premises described in a license issued by the California State Board of
Pharmacy wherein controlled substances, dangerous drugs, or dangerous devices
are stored, possessed, prepared, manufactured, derived, compounded, or
repackaged, and from which the controlled substances, dangerous drugs, or
dangerous devices are furnished, sold, or dispensed at retail. Pharmacy shall
not include any area specifically excluded by paragraph (b) of section
4037
of the Business and Professions Code.
(7) Prescription. "Prescription" means an
oral, written, or electronic transmission order that is issued by a physician,
dentist, optometrist, or podiatrist licensed in this state
and
given individually for the person or persons for whom ordered. The order must
include all of the following:
(A) The name or
names and address of the patient or patients.
(B) The name and quantity of the drug or
device prescribed and the directions for use.
(C) The date of issue.
(D) Either rubber stamped, typed, or printed
by hand or typeset, the name, address, and telephone number of the prescriber,
his or her license classification, and his or her federal registry number, if a
controlled substance is prescribed.
(E) A legible, clear notice of the conditions
for which the drug is being prescribed, if requested by the patient or
patients.
(F) If in writing, signed
by the prescriber issuing the order.
(8) Physicians, Dentists, Optometrists, and
Podiatrists. "Physicians," "dentists," "optometrists," and "podiatrists" are
persons authorized by a currently valid and unrevoked license to practice their
respective professions in this state. "Physician" means and includes any person
holding a valid and unrevoked physician's and surgeon's certificate or
certificate to practice medicine and surgery, issued by the Medical Board of
California or the Osteopathic Medical Board of California and includes an
unlicensed person lawfully practicing medicine pursuant to section 2065 of the
Business & Professions Code, when acting within the scope of that
section.
(9) Medicines. "Medicines"
means:
(A) Except where taxable for all uses
as provided in subdivision (c), any product fully implanted or injected in the
human body, or any drug or any biologic, when such are approved by the United
States Food and Drug Administration to diagnose, cure, mitigate, treat or
prevent disease, illness or medical condition regardless of ultimate use,
or
(B) Any substance or preparation
intended for use by external or internal application to the human body in the
diagnosis, cure, mitigation, treatment or prevention of disease and which is
commonly recognized as a substance or preparation intended for that use.
The term medicines also includes certain articles, devices,
and appliances as described in subdivision (b) of this regulation.
For purposes of subdivision (a)(9)(A), products "approved
by the United States Food and Drug Administration" means any product for which
a premarket notification was cleared by the United States Food and Drug
Administration or for which an application for premarket approval was approved
by the United States Food and Drug Administration.
Medicines are further defined in subdivisions (b) and (c)
below.
(b) "Medicines." In addition to the
definition set forth in subdivision (a)(9) of this regulation, the term
"medicines" means and includes the following items:
(1) Preparations and Similar Substances.
Preparations and similar substances intended for use by external or internal
application to the human body in the diagnosis, cure, mitigation, treatment or
prevention of disease and which are commonly recognized as a substance or
preparation intended for such use qualify as medicines. Tax does not apply to
the sale or use of such medicines sold or furnished under one of the conditions
provided in subdivision (d)(1) through (d)(6).
"Preparations and similar substances" include, but are not
limited to, drugs such as penicillin, and other antibiotics, "dangerous drugs"
(drugs that require dispensing only on prescription); alcohol (70% solution)
and isopropyl; aspirin; baby lotion, oil, and powder; enema preparations;
hydrogen peroxide; lubricating jelly; medicated skin creams; oral
contraceptives; measles and other types of vaccines; topical creams and
ointments; and sterile nonpyrogenic distilled water. Preparations and similar
substances applied to the human body in the diagnosis, cure, mitigation,
treatment, or prevention of disease qualify as medicines. "Preparations and
similar substances" also include Total Parenteral Nutrition (also called TPN),
Intradialytic Parenteral Nutrition (also called IDPN), and food provided by way
of enteral feeding, except when the TPN, IDPN, or food provided by enteral
feeding qualifies as a meal under Regulation 1503. For purposes of this
regulation, TPN, IDPN, and enteral feeding are means of providing complete
nutrition to the patient; TPN and IDPN are provided in the form of a collection
of glucose, amino acids, vitamins, minerals, and lipids, TPN being administered
intravenously to a patient who is unable to digest food through the
gastrointestinal tract and IDPN being administered to hemodialysis patients as
an integral part of the hemodialysis treatment; enteral feeding is the feeding
of the patient directly into the gastrointestinal tract.
(2) Permanently Implanted Articles. Articles
permanently implanted in the human body to assist the functioning of, as
distinguished from replacing all or any part of, any natural organ, artery,
vein or limb and which remain or dissolve in the body qualify as medicines. In
addition, articles permanently implanted in the human body to mark the location
of a medical condition, such as breast tissue markers, qualify as medicines. An
article is considered to be permanently implanted if its removal is not
otherwise anticipated. Except for devices excluded from the definition of
"medicines," permanently implanted articles include the interdependent internal
and external components that operate together as one device in and on the
person in whom the device is implanted. Tax does not apply to the sale or use
of articles permanently implanted in the human body to assist the functioning
of any natural organ, artery, vein or limb or mark the location of a medical
condition, and which remain or dissolve in the body when such articles are sold
or furnished under one of the conditions provided in subdivision (d)(1) through
(d)(6).
Permanently implanted articles include, but are not limited
to, permanently implanted artificial sphincters; bone screws and bone pins;
dental implant systems including dental bone screws and abutments; permanently
implanted catheters; permanently implanted hydrocephalus devices and their
implanted pressure regulating components; implanted defibrillators and
implanted leads; pacemakers; tendon implants; testicular gel implants; and ear
implants, including the ear implant's interdependent internal and external
components. Sutures are also included whether or not they are permanently
implanted. A non-returnable, nonreusable needle fused or prethreaded to a
suture is regarded as part of the suture.
Implantable articles that do not qualify as "permanently"
implanted medicines include, but are not limited to, Chemoport implantable
fluid systems; Port-a-Cath systems used for drug infusion purposes; disposable
urethral catheters; temporary myocardial pacing leads used during surgery and
recovery; and defibrillator programmer and high voltage stimulator used with an
implanted defibrillator.
(3)
Artificial Limbs and Eyes. Artificial limbs and eyes, or their replacement
parts, including stump socks and stockings worn with artificial legs and
intraocular lenses for human beings, qualify as medicines as provided by
Revenue and Taxation Code section
6369(c)(5).
Tax does not apply to the sale or use of these items when sold or furnished
under one of the conditions provided in subdivision (d)(1) through
(d)(6).
(4) Orthotic Devices.
Orthotic devices and their replacement parts, designed to be worn on the person
of the user as a brace, support or correction for the body structure are
medicines as provided under Revenue and Taxation Code section
6369(c)(3).
The sale or use of orthotic devices and their replacement parts is not subject
to tax when sold or furnished under one of the conditions provided in
subdivision (d)(1) through (d)(6). Orthotic devices and their replacement parts
do not need to be furnished by a pharmacist, within the meaning of subdivision
(d)(1), to be considered dispensed on prescription provided the devices are
furnished pursuant to a written order of a physician or podiatrist. For the
purposes of this regulation, orthotic devices furnished pursuant to a written
order of a physician or podiatrist by, but not limited to, medical device
retailers, clinics, physical therapists, device suppliers, intermediate care
facilities, or other such persons, are deemed to be dispensed on prescription
within the meaning of subdivision (d)(1).
Orthotic devices worn on the body of the person include,
but are not limited to, abdominal binders and supports, ace bandages, ankle
braces, anti-embolism stockings, athletic supporters (only for patients
recovering from rectal or genital surgery), casts, and cast components,
cervical supports, neck collars, cervical traction devices, clavicular splints,
post-surgical corsets, elbow supports, head halters, pelvic traction devices,
post-operative knee immobilizers and braces, legging orthoses, rib belts and
immobilizers, rupture holders, sacral belts, sacro-lumbar back braces, shoulder
immobilizers, slings, stump shrinkers, sternum supports, support hose (and
garter belts used to hold them in place), thumb and finger splints, trusses,
and wrist and arm braces. All of the above must be worn on the body of the
person and act as a brace, support or correction for body structure to qualify
as a medicine. If any part of the orthotic device is not worn on the person,
the device is not a medicine for the purposes of this regulation.
Orthopedic shoes and supportive devices for the foot do not
qualify as medicines unless they are an integral part of a leg brace or
artificial leg or are custom-made biomechanical foot orthoses. "Custom-made
biomechanical foot orthosis" means a device that is made on a positive model of
the individual patient's foot. The model may be individually constructed from
suitable model material such as plaster of Paris, stone, or wax, and may be
manually constructed or fabricated using electronic technology.
"Custom-made biomechanical foot orthosis" do not
include:
(A) any pre-made or
pre-molded foot orthosis or shoe insert even if it has been modified or
customized for an individual patient by the practitioner regardless of the
method of modification;
(B) any
foot orthosis fabricated directly on the patient's foot regardless of the
method and materials used and regardless of its individual character;
or
(C) any foot orthosis fabricated
inside of the patient's shoe regardless of the method of manufacture and
materials used and regardless of its individual character.
(5) Prosthetic Devices. Prosthetic devices
and their replacement parts designed to be worn on or in the patient to replace
or assist the functioning of a natural part of the human body are medicines as
provided under Revenue and Taxation Code section
6369(c)(4).
The sale or use of prosthetic devices and their replacement parts is not
subject to tax when sold or furnished under one of the conditions provided in
subdivision (d)(1) through (d)(6). Prosthetic devices and their replacement
parts do not need to be furnished by a pharmacist, within the meaning of
subdivision (d)(1), to be considered dispensed on prescription provided the
devices are furnished pursuant to a written order of a physician or podiatrist.
For the purposes of this regulation, prosthetic devices furnished pursuant to a
written order of a physician or podiatrist by, but not limited to, medical
device retailers, clinics, physical therapists, device suppliers, intermediate
care facilities, or other such persons, are deemed to be dispensed on
prescription within the meaning of subdivision (d)(1). For purposes of this
regulation only, prosthetic devices include bags and tubing, as well as
filters, locks, tape, clamps, and connectors which are integral to the tubing,
each of which is used to dispense enteral feeding to the patient, including:
gastrostomy tubes (also called G tubes) which are used to deliver the nutrition
directly into the stomach; jejunostomy tubes (also called J tubes) which are
used to deliver the nutrition directly into the intestinal tract; and
nasogastric tubes (also called NG tubes) which are used to deliver the
nutrition directly through the nasal passage to the stomach. For purposes of
this regulation only, prosthetic devices also include needles, syringes,
cannulas, bags, and tubing, as well as filters, locks, tape, clamps, and
connectors which are integral to the tubing, each of which is used to dispense
TPN or IDPN to the patient, provided each of these items is used primarily to
dispense the TPN or IDPN.
Prosthetic devices that are considered medicines when worn
on or in the patient include, but are not limited to, acetabular cups, atrial
valves, breast tissue expanders and tissue expanders, cervical cuffs, dacron
grafts, heart valves, orbital implant, nerve cups, rhinoplasty prosthesis,
neuromuscular electrical stimulators, transcutaneous nerve stimulators, urinary
incontinent devices, and wigs and hairpieces prescribed by a physician or
podiatrist.
Prosthetic devices that do not qualify as "medicines"
include, but are not limited to, air compression pumps and pneumatic garments;
noninvasive, temporary pace makers; vacuum/constriction devices used to treat
male impotency; auditory, ophthalmic and ocular devices or appliances; and
dental prosthetic devices and materials such as dentures, removable or fixed
bridges, crowns, caps, inlays, artificial teeth, and other dental prosthetic
materials and devices. Sales of such items are subject to tax in the same
manner as any other sale of tangible personal property.
(6) Drug Infusion Devices. Programmable drug
infusion devices to be worn on or implanted in the human body which
automatically cause the infusion of measured quantities of a drug on an
intermittent or continuous basis at variable dose rates and at high or low
fluid volume into the body of the wearer of the device qualify as medicines
under Revenue and Taxation Code section
6369(c)(6).
The sale or use of the qualifying infusion device is not subject to tax when
the device is sold or furnished under one of the conditions provided in
subdivision (d)(1) through (d)(6).
(c) Exclusions from the Definition of
"Medicines."
Except as otherwise provided in subdivision (b), the
following items are specifically excluded from the definition of medicines.
Sales of these items are subject to tax in the same manner as any other sale of
tangible personal property.
(1)
Orthodontic, prosthetic (except as described in subdivision (b)(5)), auditory,
ophthalmic or ocular devices or appliances.
(2) Articles which are in the nature of
splints, bandages, pads, compresses, supports, dressings, instruments,
apparatus, contrivances, appliances, devices or other mechanical, electronic,
optical or physical equipment or article or the component parts and accessories
thereof. "Medicines" does not include arch supports, cervical pillows, exercise
weights (boots or belts), hospital beds, orthopedic shoes and supportive
devices (unless an integral part of a leg brace or artificial leg), plastazote
inserts, plastazote shoes, plastic shoes (custom or ready-made), sacro-ease
seats, shoe modifications, spenco inserts, traction units (other than those
fully worn on the patient), thermophore pads, nor foot orthoses.
(3) Any alcoholic beverage the manufacture,
sale, purchase, possession or transportation of which is licensed and regulated
by the Alcoholic Beverage Control Act (division 9, commencing with section
23000,
of the Business and Professions Code).
(d) Application of Tax -- In General. Tax
applies to retail sales, including over-the-counter sales of drugs and
medicines, and other tangible personal property by pharmacists and others.
However, tax does not apply to the sale or use of medicines when sold or
furnished under one of the following conditions:
(1) prescribed for the treatment of a human
being by a person authorized to prescribe the medicines, and dispensed on
prescription filled by a pharmacist in accordance with law, or
(2) furnished by a licensed physician,
dentist or podiatrist to his or her own patient for treatment of the patient,
or
(3) furnished by a health
facility for treatment of any person pursuant to the order of a licensed
physician, dentist or podiatrist, or
(4) sold to a licensed physician, dentist,
podiatrist or health facility for the treatment of a human being, or
(5) sold to this state or any political
subdivision or municipal corporation thereof, for use in the treatment of a
human being; or furnished for the treatment of a human being by a medical
facility or clinic maintained by this state or any political subdivision or
municipal corporation thereof, or
(6) effective January 1, 1995, furnished by a
pharmaceutical manufacturer or distributor without charge to a licensed
physician, surgeon, dentist, podiatrist, or health facility for the treatment
of a human being, or to an institution of higher education for instruction or
research. Such medicine must be of a type that can be dispensed only:
(a) for the treatment of a human being,
and
(b) pursuant to prescriptions
issued by persons authorized to prescribe medicines. The exemption provided by
this subdivision applies to the constituent elements and ingredients used to
produce the medicines and to the tangible personal property used to package
such medicines.
(e) Specific Tax Applications.
(1) Prescriptions. No person other than a
licensed physician, dentist, optometrist or podiatrist is authorized to
prescribe or write a prescription for the treatment of a human being. Tax does
not apply to the sale or use of medicines prescribed by a licensed physician,
dentist, optometrist, or podiatrist for the treatment of a human being and
dispensed on prescription filled by a pharmacist.
(2) Licensed Physician, Dentist or
Podiatrist. Tax does not apply to a specific charge made by a licensed
physician, dentist or podiatrist to his or her own patient for medicines
furnished for the treatment of the patient. Tax also does not apply to sales of
medicines to licensed physicians, dentists or podiatrists for the treatment of
a human being regardless of whether the licensed physician, dentist or
podiatrist makes a specific charge to his or her patient for the medicines
furnished.
(3) Health Facility. Tax
does not apply to sales of medicines by a health facility (as defined in
subdivision (a)(4)) for the treatment of any person pursuant to the order of a
licensed physician, dentist or podiatrist. Tax does not apply to sales of
medicines to a health facility for the treatment of a human being regardless of
whether or not a specific charge is made for the medicines.
(4) Pharmaceutical Manufacturer or
Distributor. Tax does not apply to the storage, use or consumption of medicines
furnished by a pharmaceutical manufacturer or distributor without charge to a
licensed physician, surgeon, dentist, podiatrist, or health facility for the
treatment of a human being or furnished without charge to an institution of
higher education for instruction or research provided the medicines furnished
are of a type that can be dispensed only (1) on prescription by persons
authorized to prescribe and (2) for the treatment of a human being. The
exemption from tax includes the costs of the materials used to package the
"sample" medicines, such as bottles, boxes, blister packs, patches impregnated
with medicines, or pre-filled syringes, and the elements and ingredients used
to produce the "samples" whether or not such items are purchased under a resale
certificate in this state or outside this state. When a pre-filled syringe or
other such delivery device is used to package and contain a sample medicine
(i.e., pre-filled with the medicine) as well as to inject or otherwise
administer the medicine to the patient, the exemption from tax will not be lost
due to the fact that the device is used for a dual purpose. However, the use of
empty syringes or other such delivery devices, furnished to the licensed
physician separately or included in the packages with the medicines, is subject
to tax.
This exemption applies in the same manner to the use of
clinical trial medicines during the United States Food and Drug
Administration's drug development and approval process. "Clinical trial
medicines" are substances or preparations approved as "Investigational New
Drugs" by the United States Food and Drug Administration intended for treatment
of, and application to, the human body, which are furnished by a pharmaceutical
developer, manufacturer, or distributor to a licensed physician and
subsequently dispensed, furnished, or administered pursuant to the order of the
licensed physician. "Clinical trial medicines" do not include placebos.
Placebos are not used for the treatment of a human being and, as such, do not
qualify for the exemption provided under this subdivision. Thus, the use of
placebos is subject to tax.
(5) Antimicrobial Agents Used by Hospital
Personnel. Tax does not apply to the sale or use of substances or preparations,
such as antiseptic cleansers or scrubs, when such substances or preparations
qualify as medicines and are used by hospital personnel on the patient or by
hospital personnel on their own bodies to benefit the patient, and which
constitute a critical component of the patient's treatment. Qualifying
medicines used on the bodies of hospital personnel include antimicrobial agents
used for preoperative scrubbing or hand cleansing prior to any patient contact
such as Accent Plus Skin Cleanser; Accent Plus Perinal Cleanser; Bacti-Stat;
Betadine; and Medi-Scrub. However, antimicrobial agents such as Accent Plus 1
Skin Lotion; Accent Plus 2 Body Massage; Accent Plus 2 Skin Crème;
and Accent Plus Total Body Shampoo applied to the body of hospital personnel
are not considered used in the treatment of the patient and the sale or use of
these products is subject to tax.
(6) Vitamins, Minerals, Herbs, and Other Such
Supplements. In general, sales of vitamins, minerals, herbs and other such
supplements are subject to tax. However, when vitamins, minerals, herbs and
other such supplements are used in the cure, mitigation, treatment or
prevention of disease, and are commonly recognized as a substance or
preparation intended for such use, they will qualify as medicines for the
purposes of Revenue and Taxation Code section
6369.
As such, their sale or use is not subject to tax when sold or furnished under
one of the conditions in subdivision (d)(1) through (d)(6).
(7) Dietary Supplements and Adjuncts. Dietary
supplements and adjuncts furnished to a patient as part of a medically
supervised weight loss program to treat obesity qualify as medicines for the
purposes of Revenue and Taxation Code section
6369
when the product does not otherwise qualify as a food product under Regulation
1602. The sale or use of such products is not subject to tax when sold or
furnished under one of the conditions in subdivision (d)(1) through
(d)(6).
(8) Diagnostic Substances,
Test Kits, and Equipment. Tax applies to the sale or use of diagnostic
substances applied to samples of cells, tissues, organs, or bodily fluids and
waste after such samples have been removed, withdrawn, or eliminated from the
human body. Diagnostic substances are applied to the samples outside the living
body ("in vitro") in an artificial environment. They are not administered in
the living body ("in vivo"). As the substances are not applied internally or
externally to the body of the patient, they do not qualify as medicines under
Revenue and Taxation Code section
6369.
Except as provided in Regulation 1591.1(b)(4), tax applies
to the sale or use of test kits and equipment used to analyze, monitor, or test
samples of cells, tissues, organs and blood, saliva, or other bodily fluids.
Such items do not qualify as medicines regardless of whether they are
prescribed for an individual by a person authorized to prescribe and dispensed
pursuant to a prescription.
(f) Insurance Payments
(1) Medical Insurance and Medi-Cal. The
exemption of retail sales of medicines is not affected by the fact that charges
to the person for whom the medicine is furnished may be paid, in whole or in
part, by an insurer. This is so even though a joint billing may be made by the
retailer in the name of both the person and the insurer.
(2) Medicare
(A) Medicare Part A. Tax does not apply to
the sale of items to a person insured pursuant to Part A of the Medicare Act as
such sales are considered exempt sales to the United States Government. Under
Part A, the healthcare provider has a contract with the United States
Government to provide certain services. Therefore, to the extent allowed
pursuant to Regulation 1503, sales of medicines, devices, appliances, and
supplies in which payment is made under Part A qualify as exempt sales to the
United States Government.
(B)
Medicare Part B. Tax applies to sales of items to a person in which payment is
made pursuant to Part B of the Medicare Act. Sales made under Part B do not
qualify as exempt sales to the United States Government even though the patient
may assign the claim for reimbursement to the seller and payment is made by a
carrier administering Medicare claims under contract with the United States
Government. Under Part B, the seller does not have a contract with the United
States Government. The contract is between the patient and the United States
Government. Unless the sale is otherwise exempt (such as a sale of a medicine
under subdivision (d)), the sale is subject to tax.
(3) Employer Medical Contracts. Certain
employers have contracted with their employees to provide the latter with
medical, surgical and hospital benefits in a hospital operated by or under
contract with the employer for a fixed charge. Usually the charge is by payroll
deduction. These contracts are not insurance plans; rather, they are agreements
to furnish specified benefits under stated conditions, one of which may be that
no charge is to be made to the employee for prescribed medicines. The
agreements may provide for making a charge for medicines furnished to
out-patients but not to in-patients. This in no way affects the exemption of
sales of medicines.
(g)
Records. Any pharmacy whether in a health facility or not must keep records in
support of all deductions claimed on account of medicines. Section
4081
of the Business and Professions Code requires that all prescriptions filled
shall be kept on file and open for inspection by duly constituted authorities.
Pursuant to section
4081
of the Business and Professions Code, physicians and surgeons and podiatrists
must keep accurate records of drugs furnished by them. Any deduction on account
of sales of medicines shall be supported by appropriate records.
(1) The following written information
constitutes acceptable documentation for retailers in those cases where sales
are made of supplies which are "deemed to be dispensed on prescription" within
the meaning of section 6369:
Name of purchaser
Name of doctor
Date of sale
Item sold
The sale price
(2) "Double Deduction" Unauthorized. The law
does not, of course, permit a double deduction for sales of exempt medicines.
For example, if an exemption is claimed on account of a sale of a prescription
medicine, no additional deduction for the same sale may be taken as a sale to
the United States Government under the Medicare Program.
(3) Persons making purchases of items in
which their sale or use is exempt under this regulation should give their
suppliers an exemption certificate pursuant to Regulation
1667.
