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Business Taxes Law Guide—Revision 2024
Sales and Use Tax Annotations
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425.0000 Prescription Medicines—Regulation 1591
Annotation 425.0050
(a) Generally
425.0050 Experimental Drug. An experimental drug dispensed by doctors who are being paid by a drug company to participate in the study of an experimental drug is "prescribed for the treatment of a human being …" and "furnished by a licensed physician and surgeon … to his own patient for treatment of the patient." When the experimental drug is sold by a manufacturer to a drug company which pays doctors to participate in theexperiment, an exempt sale of medicine occurs since the sale is in the manner prescribed in Regulation 1591(a)(1) and (2) and tax will not apply to such sales. The use of the drug made by the doctors is attributable to the drug company, for whom the doctors act as agents. 9/8/78.