The Administrative Law Division of the Alabama Department of Revenue recently ruled that sales of glucose strips in the state are subject to tax. DEGC Enterprises, Inc. v. State, Dept. of Revenue, Dkt. No. S. 10-1011 (Dept. of Revenue, Admin. Law Div. Mar. 12, 2012).
The taxpayer in the case is a licensed Alabama pharmacy that sold glucose test strips to diabetes patients in Alabama pursuant to physician prescriptions. The issue before the Division was whether those glucose test strips were exempt from sales tax under Alabama's prescription drug exemption.
In order for an item to qualify for the prescription drug exemption, it must be (1) a medicine; (2) prescribed by a physician; (3) filled by a licensed pharmacist; and (4) for human consumption or intake. Ala. Code sec. 40-23-4.1. While glucose strips could arguably satisfy the second and third requirements, they fail to meet the remaining two requirements. Glucose strips are not considered a "medicine" because they are not used to treat an illness (in this case, diabetes). Additionally, glucose strips were not made for human consumption; they cannot be applied, rubbed on topically, sprayed, or otherwise consumed by a human being. Therefore, the Division concluded that the glucose strips do not qualify for the prescription drug exemption because the strips are not considered a "medicine" and are not "for human consumption or intake."