Publication 27, Drugstores
Sales of Medicines, Medical Supplies, and Medical Appliances

This page provides information on the application of sales and use tax to drugstore sales of medicines.

Introduction

In general, you are not required to report and pay tax on retail sales of medicine that are:

  • Prescribed for the treatment of a human being by a person authorized to prescribe medicines, including a licensed physician, podiatrist, or dentist, and dispensed by a registered pharmacist according to the law (refer to registered pharmacist defined below), or
  • Sold to a licensed physician, dentist, podiatrist, or health facility (refer to health facility defined) for the treatment of a human being, or
  • Sold to the State of California or any political subdivision or municipal corporation thereof (such as a city, county, or hospital district), or
  • Furnished to a medical facility or clinic maintained by the state or any political subdivision or municipal corporation thereof.

To be exempt from tax, the item sold must qualify as a medicine and be sold as described above, or its sale must be specifically exempted under the Sales and Use Tax Law. Otherwise, the sale is generally subject to tax.

Medicine defined

In general, as provided in Regulation 1591, Medicines and Medical Devices, "medicine" includes:

  • Any product fully implanted or injected in the human body, or any drug or any biologic, when such are approved by the U.S. Food and Drug Administration (FDA) to diagnose, cure, mitigate, treat, or prevent any disease, illness, or medical condition regardless of ultimate use, and
  • 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.

How tax applies to sales of medical products can be complicated. Some supplies, devices, and appliances are specifically included within the definition of "medicines," and some are specifically excluded. Even when a product meets the definition of a "medicine," it must meet certain requirements for its sale to be exempt from sales and use tax. For detailed information about how tax applies to medicines, visit Regulation 1591.

If you have questions about whether a certain product qualifies for a tax exemption, it is best to get advice in writing from us. Visit the Additional Information section of this publication for instructions on how to obtain written advice from us.

Registered pharmacist defined

A "registered pharmacist" is a person to whom a certificate has been issued by the Board of Pharmacy under section 4200 of the Business and Professions Code, except as provided otherwise in Pharmacy Law (section 4000, of Division 2 of the Business and Professions Code).

Health facility defined

Sales of medicine to health facilities are generally not taxable. For purposes of the Sales and Use Tax Law, a health facility means:

  • Any facility that is organized, maintained, and operated for the diagnosis, care, prevention, and treatment of human illness, physical or mental. This includes convalescence and rehabilitation that includes care during and after pregnancy, or for any one or more of these purposes, for one or more people, to which they are admitted for a 24-hour stay or longer (Health and Safety Code section 1250).

An organized outpatient health facility that provides direct medical, surgical, dental, optometric, podiatric, or psychological advice, services, or treatment to patients who remain less than 24 hours, which may also provide diagnostic or therapeutic services to patients in the home as an incident to care provided at the clinic facility (Health and Safety Code section 1200 and section 1200.1).

Application of tax to medicines and medical devices

The following information explains the application of sales and use tax on medicines and other medical devices. For these explanations, we assume the items being sold will be used to treat a human being rather than a pet or other animal. For information on how tax applies to medicines and other medical items for pets or other animals, visit publication 36, Veterinarians.

Prescribed medicines

You are not generally required to report and pay tax on sales of prescribed drugs and other preparations or substances approved by the FDA used to treat, diagnose, cure, mitigate, or prevent disease. To qualify for an exemption, the drug or preparation must be prescribed by a person authorized to prescribe the medicines, such as a licensed physician, dentist, or podiatrist, and the prescription must be filled by a registered pharmacist.

Over-the-counter medicines

Sales of over-the-counter medicines are taxable unless they are prescribed by a person authorized to prescribe the medicines, such as a licensed physician, dentist, or podiatrist, and filled by a pharmacist. Examples of over-the-counter medicines include aspirin, cough syrups, cough drops, and throat lozenges. If you have a prescription for an over-the-counter medicine written by a licensed physician, and you purchase the medicine from a pharmacist, it is not taxable.

Diabetic supplies

Tax does not apply to the sale or use of insulin and insulin syringes, glucose test strips, or skin puncture lancets furnished by a pharmacist, as directed by a physician, to a diabetic patient for the patient’s use in treating diabetes. Since these items are not regarded as medicines, to qualify for this exemption from tax, glucose test strips and skin puncture lancets must be furnished by a pharmacist for the patient’s own use in determining their blood sugar level. The sale of glucose test strips or skin puncture lancets for use by someone other than the diabetic patient or the furnishing of such items by someone other than a pharmacist is subject to tax. This also applies to items furnished by a health facility or administered by hospital personnel.

Tax does apply to the sale or use of test kits and equipment used to analyze, monitor, or test samples of cells, tissue, organs and blood, saliva, or other bodily fluids. For example, sales of electric blood monitors are taxable even though they are used in connection with the treatment of diabetes.

Hemodialysis products

Sales of hemodialysis products ordered by a licensed physician and supplied to a patient by a registered pharmacist are not taxable.

Medical supplies that are not considered medicines

Some medical supplies are not considered medicines, and their sale is subject to tax—even when the supplies are prescribed by a physician. The following are examples of medical supplies that are not considered medicines:

  • Bandages, splints, pads, compresses, supports, and dressings
  • Cervical pillows
  • Exercise weights (boots or belts)
  • Hospital beds
  • Hypodermic needles (For information on sales of insulin syringes, refer to diabetic supplies.)
  • Instruments, apparatus, contrivances, appliances, devices, or other mechanical, electronic, optical or physical equipment is used as a single word in Regulation 1591, Medicines and Medical Devices.
  • Orthopedic, Plastazote, and plastic shoes (custom or ready-made); shoe modifications; Plastazote and Spenco inserts, arch supports, and supportive devices (unless an integral part of a leg brace or artificial leg)
  • Sacro-ease seats
  • Thermometers
  • Thermophore pads
  • Traction units (unless they qualify as medicines because of how they are worn). For more information, visit Regulation 1591, Medicines and Medical Devices.

However, prosthetic and orthotic devices may be considered medicines depending on how the user wears them. Refer to the following sections for more information.

Prosthetic devices

Prosthetic devices are designed to be worn on or in the body to replace or assist the functioning of a natural part of the body. To qualify for the exemption, the device must be capable of being worn fully on or in the body.

Certain prosthetic devices and their replacement parts are considered medicines, and their sale is not taxable when furnished according to a written prescription from a physician or podiatrist.

Prosthetic devices and their replacement parts are not required to be furnished by a pharmacist to be considered dispensed on prescription. However, the devices must be furnished following a written order from a physician or podiatrist.

Prosthetic devices that are not considered medicines include, but are not limited to, auditory, ophthalmic and ocular devices or appliances, and dental prosthetic materials and devices. Sales of these items are generally subject to tax.

Mammary prostheses and ostomy appliances and supplies

Sales tax does not apply to the sale of mammary prostheses or to ostomy appliances and related supplies that are necessary as the result of any surgical procedure that creates an artificial opening in the body for the elimination of natural waste.

Mammary prostheses, ostomy appliances, and related supplies do not need to be furnished by a pharmacist to be considered dispensed by prescription if they are furnished according to a written order of a person authorized to prescribe, such as a physician.

Examples of qualifying mammary prostheses and ostomy appliances and supplies include:

  • Adhesive spray and remover
  • Antacid used externally as a skin ointment belt
  • Bras to hold a mammary prosthesis in place
  • Catheters used as a result of an artificial opening created in the human body
  • Closed stoma bags
  • Colostomy bags
  • Deodorant used on the prostheses or ostomy patient
  • Drainable stoma bags
  • Endotracheal, tracheotomy, and tracheostomy tubes used for evacuation of metabolic waste when used postoperatively or for home care
  • Filler pads
  • Karaya rings
  • Loop ostomy supplies and tubing
  • Lymphedema arm sleeves
  • Nonallergic paper tape and gauze
  • Skin bond cement
  • Skin gel
  • Tincture of benzoin applied topically as a protective
  • Urinary drainage appliances

Orthotic devices

Orthotic devices are designed to be worn as a brace, support, or correction for the body structure. To qualify as medicines, the device must be worn on the user. (Refer to orthopedic shoes and supportive devices for the foot.)

Certain orthotic devices and their replacement parts are considered medicines and are not subject to tax when sold as described in the introduction.

Orthotic devices and their replacement parts do not need to be furnished by a pharmacist to be considered dispensed by prescription provided the devices are equipped according to a written order of a physician or podiatrist. Orthotic devices furnished, according to a written order by a physician or podiatrist, by medical device retailers, clinics, physical therapists, device suppliers, intermediate care facilities, or other such persons deemed to be dispensed on prescription.

The following are examples of prescribed devices, the sale of which are not taxable when the devices are used as described above:

  • 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
  • Cervical traction devices
  • Clavicular splints
  • Elbow supports
  • Head halters
  • Legging orthoses
  • Neck collars
  • Pelvic traction devices
  • Post-surgical corsets
  • Postoperative knee immobilizers and braces
  • Rib belts and immobilizers
  • Rupture holders
  • Sacral belts
  • Sacro lumbar back braces
  • Shoulder immobilizers
  • Slings
  • Sternum supports
  • Stump shrinkers
  • Support hose (and garter belts used to hold them in place)
  • Thumb and finger splints
  • Trusses
  • Wrist and arm braces

Orthopedic shoes and supportive devices for the foot

Sales of orthopedic shoes and supportive devices for the foot are not exempt from tax unless they are an integral part of a leg brace or artificial leg or are custom-made biomechanical foot orthoses. If you sell biomechanical foot orthoses, visit Regulation 1591, Medicines and Medical Devices, for more information about how tax applies to their sale.

Please refer to medical supplies that are not considered medicines for information on items such as cervical pillows, arch supports, and splints, which are generally subject to tax.

Other medical items

Although drugstores do not typically sell the items listed below, their sales are generally exempt from tax when furnished according to a written prescription. Such items include:

  • Artificial limbs
  • Artificial eyes
  • Crutches
  • Canes (including white canes used by the legally blind)
  • Ear implants, including the ear implant’s interdependent internal and external components that operate together as one device in and on the person in whom the device is implanted.
  • Intraocular lenses
  • Quad canes
  • Walkers
  • Wheelchairs

If you sell any of these items, visit Regulation 1591, Medicines and Medical Devices and Regulation 1591.2, Wheelchairs, Crutches, Canes, and Walkers.

Reporting sales paid by Medi-Cal

All sales of prescriptions, including those paid by Medi-Cal, must be reported on your sales and use tax return (Total Sales). Sales of items that are not exempt prescription medicines do not qualify as exempt sales when paid by Medi-Cal, and you must report and pay tax on the transaction.

Medicare payments

Part A payments. Tax does not apply to the sale of property if payment for the property is made under Part A of the Medicare Act. The sale qualifies as an exempt sale to the U.S. government. The billing for the property must be separately stated. Normally, the billing received by the patient will be used to determine whether charges are separately stated. However, if no billing is issued to the patient, the billing issued to Medicare will be used.

If the property being sold is already exempt (such as medicines), a second deduction is not allowed for sales to the U.S. government.

Since Medicare reimburses for reasonable costs, only amounts received from the government are allowable under this deduction.

Part B payments. Sales made under Part B of the Medicare Act do not qualify as exempt sales to the U.S. government. Unless the sale is exempt for another reason (such as the sale of an exempt medicine), you must report and pay tax on the transaction.

Revision October 2026