You have requested a letter ruling on behalf of ********** regarding the application of the Massachusetts sales tax, G.L. c. 64H, to sales of *****. Specifically, you request a ruling that sales of ***** are exempt from the Massachusetts sales and use tax.
You describe the facts as follows. ********** ("the Company") is a manufacturer of medical devices, specifically, ***** an FDA approved non-resorbable aesthetic injectable implant used for the correction of nasolabial folds (smile lines). ********** is categorized by the FDA as a Class III Medical Device. ***** is only obtained via prescription and is injected as an outpatient procedure by Company trained physicians such as dermatologists, plastic surgeons, and cosmetic surgeons.
********** is an implant that contains 20% non-resorbable polymethylmethacrylate (PMMA) microspheres, 30 to 50 microns in diameter, and 80% purified bovine collagen gel, with 0.3% lidocaine hydrochloride, an anesthetic. These microspheres are meant to remain intact in the dermal/subdermal junction of skin forever. Lidocaine hydrochloride is a drug and is listed in the United States Pharmacopeia (USP). ********** is currently approved by the FDA for the correction of nasolabial folds but the Company is investigating other uses.
You assert that ********** meets the definition of "medicine" under Massachusetts law. In support of this position, you state that ********** has been approved by the United States FDA. The product is classified as a medical device. The Food and Drug Administration defines a medical device as:
"An instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article, including a component part, or accessory which is:
- recognized in the official National Formulary, or the United States Pharmacopoeia, or any supplement to them,
- intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease, in man or other animals, or
- intended to affect the structure or any function of the body of man or other animals, and which does not achieve any of its primary intended purposes through chemical action within or on the body of man or other animals and which is not dependent upon being metabolized for the achievement of any of its primary intended purposes.
For the reasons discussed below, we rule that sales of ********** are subject to the Massachusetts sales and use tax even if prescribed by a registered physician.
Massachusetts imposes a five percent sales tax on sales and rentals of tangible personal property in Massachusetts by any vendor, unless otherwise exempt. See G.L. c. 64H, § 2. The exemptions from the sales tax are found in section 6 of chapter 64H. Under G.L. c. 64H, § 6(l), various specific "medical" items are exempted including sales of "medicine . . . on prescription of registered physicians . . . ." The exemption in § 6(l) makes no references to "medical devices," nor FDA classification.
In DOR Directive 91-5, the Department stated that although 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") Id., citing Letter Ruling 88-4. Insofar as the components of ********** are an inert material and an anesthetic, it neither treats a disease nor affects the physical condition of the patient, except cosmetically. The Commissioner has previously ruled that substances used for diagnosis and not for direct medication or treatment of patients are not exempt under this provision, even if such substances are sold on prescription. See Letter Rulings 98-6; 88-4.
Therefore, ***** may be classified as a medical device by the FDA, but the sale does not fall within the specific exemptions provided by G.L. c. 64H, § 6(l). The marketing materials you provided indicate that the product is used for the "correction of facial wrinkles . . . or smile lines." In addition, the product has been approved by the FDA only for the correction of nasolabial folds (smile lines), as indicated in the FDA Approval Letter issued to ********** on October 27, 2006. The Department has not ruled that products used for cosmetic purposes qualify as "medicine" within the meaning of G.L. c. 64H, § 6(l). Sales of ***** are not exempt from the sales and use tax even if sold on prescription of registered physicians.
Under the facts you have presented, we conclude that sales of ***** are subject to the Massachusetts sales and use tax even if prescribed by registered physicians.
Very truly yours,
/s/ Navjeet K. Bal
Navjeet K. Bal
Commissioner of Revenue