Section R15-5-2343. Purchases of Prescription Drugs and Prosthetic Appliances

A.      In this Section:

1.        “Drug” means an article that, according to federal or state law, is:

a.         Recognized in the official United States Pharmaco- peia, official Homeopathic Pharmacopeia of the United States, official National Formulary, or any supplement to these documents; or

b.        Intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in humans or ani- mals; or

c.         Not food and is intended to affect the structure or any function of the body of humans or animals; or

d.        Intended for use as a component of any article speci- fied in subsections (a), (b), or (c).

2.        “Drug on a prescription” means a prescription drug.

3.        “Food” means an article used for food or drink for humans or animals, chewing gum, or an article used as a component of such an article.

4.        “Hearing aid” means any wearable device designed as a remedy or to compensate for defective human hearing, including parts, attachments, accessories, and earmolds.

5.        “Legend drug” means a drug that 21 U.S.C. 353(b)(4)(A) requires to bear the symbol “Rx only” before dispensing.

6.        “Nonprescription product” means a drug or other article that can be purchased by the final consumer of the drug or article without a prescription, regardless of whether pur- chased on the advice or recommendation of a member of the medical, dental, or veterinarian profession. Examples include over-the-counter drugs and those dietary supple- ments, vitamins, minerals, herbs, and other similar sup- plements that do not qualify as prescription drugs.

7.        “Over-the-counter drug” means a drug that is subject to federal labeling requirements in 21 CFR 201.66.

8.        “Prescriber” means a member of the medical, dental, or veterinary profession authorized by federal or state law to prescribe a drug.

9.        “Prescription” means an order for a drug issued in any form.

10.     “Prescription drug” means a legend drug or a drug that, according to federal or state law, can be dispensed only:

a.         Upon a written prescription of a prescriber for the drug;

b.        Upon an oral prescription by the prescriber for the drug that federal or state law requires be reduced promptly to a form of writing by the prescriber and then filed by a pharmacist or the prescriber; or

c.         By refilling a written or oral prescription if refilling is authorized by the prescriber for the drug either in the original prescription or by oral order that is first reduced promptly to writing and then filed by a pharmacist or the prescriber.

11.     “Prescription eyeglasses” includes frames and other com- ponent parts of eyeglasses if purchased for use with the prescription lenses.

12.     “Prosthetic appliance” means an artificial device  that fully or partially replaces a part or function of the human body or increases the acuity of a sense organ.

B.       The storage, use, or consumption in this state of the following kinds of tangible personal property is not subject to tax:

1.        Prescription drugs, including those used in the course of treating patients;

2.        Medical oxygen, pursuant to A.R.S. § 42-5159(A)(16);

3.        Insulin, insulin syringes, and glucose strips, whether or not prescribed;

4.        Prosthetic appliances, prescribed or recommended by a statutorily-authorized individual;

5.        Durable medical equipment, pursuant to A.R.S. § 42- 5159(A)(21);

6.        Prescription eyeglasses and contact lenses; and

7.        Hearing aids. Batteries and cords are subject to tax.

C.      The purchase of component and repair parts for any tangible personal property that is exempt under either subsection (B) or

(F) is not subject to tax.

D.      If a written prescription or recommendation is required to pur- chase tangible personal property, a taxpayer shall maintain the prescription or recommendation as part of the taxpayer’s records. The taxpayer’s records for documenting purchases shall provide reasonable detail to allow the Department, upon inspection, to identify property as exempt.

E.       Purchases by a final consumer of nonprescription products and those medical supplies or appliances not provided for under subsection (B) are subject to tax.

F.       Purchases of nonprescription products or other medical sup- plies or appliances by doctors, dentists, or veterinarians are subject to tax unless the purchase qualifies as a purchase for resale and the doctor, dentist, or veterinarian is a retailer in the business of reselling the property.

Historical Note

Renumbered from R15-5-2330 and amended effective September 29, 1993 (Supp. 93-3). Amended by final

rulemaking at 11 A.A.R. 2952, effective September 10,

2005 (Supp. 05-3).