February 18, 1988

You have asked for a ruling on whether sales of blood diagnostic products used by diabetics on prescription of registered physicians are exempt from the Massachusetts sales tax. The facts set out in your request are as follows.

Facts

_______ Pharmacy, Inc. sells, among other items, blood glucose meters, lancets, and chemical test strips used by diabetics to monitor the level of glucose in their blood. More specifically, Accu-cheks, Diascans, Glucoscans and Glucometers are portable meters that permit a diabetic to monitor his or her blood glucose level by measuring the Mg/dL ratio of glucose to whole blood and calculating the blood glucose level over a period of time. Autoclix, Dialets, Penlets and Glucolets are lancet devices specially designed for obtaining the blood sample used in monitoring the blood glucose level of diabetics. Chemstrips, Diascan test strips, Glucoscan test strips and Glucostix are chemically-treated strips that register the presence of glucose in whole blood, the level of which is measured by meters. All of these medical products may be purchased without a prescription, but are ordinarily purchased pursuant to the prescription of a registered physician for the treatment of diabetes.

Conclusion

The blood diagnostic products used by diabetics that you describe are subject to the Massachusetts sales tax, whether or not sold on prescriptions of registered physicians.

Discussion

Section 6(l) of G.L. c. 64H, the Massachusetts sales tax statute, exempts retail sales of various medical items from tax, including "medicine, insulin needles and insulin syringes on prescriptions of registered physicians and sales of insulin." In interpreting this provision, the Department has not restricted the exemption to diabetes-related medications sold on physicians' prescriptions, but rather has applied it to any medicine sold on a physician's prescription. See, e.g., DOR Directive 86-32 (sales of over-the-counter medications on prescription exempt).
The Department has, however, limited the term "medicine" to substances or preparations that treat or cure illnesses, rather than products that diagnose medical problems. Although the Massachusetts tax statutes do not define "medicine," the Department's interpretation of the term accords with its common meaning, as evidenced by the definition in Webster's New Collegiate Dictionary (1979) (medicine is "a substance or preparation used in treating disease;...something that affects well-being"). In Letter Ruling 79-15, the Commissioner considered the taxation of blood and urine diagnostic products prescribed by physicians to evaluate patient conditions for various symptoms or disorders. This ruling concluded that these products, "administered to extracted body material such as blood and urine," were taxable because they were "used for diagnosis and not for direct medication or treatment of patients under [a] physician's direction or prescription." The same reasoning and result obtain here. The medical devices that you describe are used for diagnosis and not for direct medication or treatment of patients.

No other construction of the diabetes-related provisions of § 6(l) exempts these blood diagnostic devices. They are not exempt by virtue of being analogous to insulin needles, because in fact they do not deliver insulin to the patient's body. Cf. Letter Ruling 82-111 (infusion pumps used to deliver insulin exempt from sales tax). Nor may these devices be said to come within § 6(l)'s exemption for sales of insulin itself.


Very truly yours,
Stephen W. Kidder
Commissioner of Revenue
February 18, 1988
LR 88-4