Overview
The South Carolina Department of Revenue (DOR) has clarified the application of the state’s sales and use tax exemption concerning specific non-opioid pain medications administered beneath the skin.
Details of the Tax Exemption
The DOR determined that a non-opioid pain medication administered by a physician or other healthcare professional, in a medical office, using a proprietary delivery system that delivers the medication below the surface of the skin, similar to syringe injections qualifies for the sales and use tax exemption under S.C. Code Ann. § 12-36-2120(80).
Key Points:
- The exemption applies to injectable medications.
- The exemption does not apply to:
- Patches
- Creams
- Other delivery methods where medication is merely absorbed into the skin without force.
Mechanism of Action Considered by DOR
- The taxpayer’s system delivers a high concentration of the active ingredient below the surface layers of the skin to deactivate nerve fibers and pain receptors quickly.
- If the compound were applied directly to the skin without the taxpayer’s proprietary system, the active ingredient would not penetrate quickly through the skin’s channels and would act more like a topical cream or lotion.
Clarification on the Definition of Injectable
While a traditional injection typically involves a needle and syringe, the exemption statute does not limit the injection method to these tools.
The DOR concluded that, for purposes of the exemption in S.C. Code Ann. § 12-36-2120(80):
An injectable medication or biologic is one in which a medication or biologic is forcefully introduced into the body for medical purposes (e.g., treatment, prevention), and is exempt from the sales and use tax as an injectable medication.
Summary
This determination reinforces that the method of delivery specifically whether it forcibly introduces the medication below the skin determines whether a medication qualifies for the South Carolina sales tax exemption.
Frequently Asked Questions
What qualifies a medication for the South Carolina sales and use tax exemption?
A medication qualifies for the exemption if it is administered by a healthcare professional using a method that forcibly delivers the medication beneath the skin, such as an injection or similar delivery system. The exemption is based on the delivery method, not the medication type alone.
Are topical creams or patches eligible for the sales tax exemption?
No, topical creams, patches, and other non-invasive delivery methods that merely allow the medication to be absorbed into the skin are not eligible. The exemption specifically excludes such methods, as they do not meet the criteria of being forcefully introduced below the skin.
Does the use of a syringe determine whether a medication is considered injectable?
Not necessarily. According to the South Carolina DOR, the term “injectable” covers any method that forcefully introduces a medication or biologic into the body for medical purposes, even if a traditional syringe and needle are not used.
What is the significance of the proprietary delivery system mentioned?
The proprietary system in question delivers a high concentration of the active ingredient below the surface of the skin, similar in effect to a syringe injection. This qualifies it as an injectable, making it eligible for the sales and use tax exemption under S.C. Code Ann. § 12-36-2120(80).
Why did the Department of Revenue issue this clarification?
The DOR issued the clarification to ensure consistent application of the tax exemption law and to confirm that qualifying injectable medications include those delivered by innovative technologies, as long as they meet the defined criteria of forceful subdermal administration.