Were collagen-based implants administered to patients by physicians exempt from Florida sales tax as medical products?

Plain-English summary

The collagen-based implants were exempt medical products when dispensed to patients by physicians. The products were injected to replenish collagen and treat defective, diseased, traumatized, or aging tissue, including scars, folds, and other soft-tissue defects.

The product literature restricted sale, distribution, or use to a licensed physician's or oral and maxillofacial surgeon's lawful order. On those facts, the Department applied the medical exemption for prescribed products and drugs sold to or by physicians in connection with treatment.

What this means for you

The exemption rested on the product's medical treatment use and physician-controlled dispensing. It was not a general exemption for every collagen product or cosmetic item.

Common questions

Q: Were the collagen implants taxable? No, under the described physician-dispensing facts.

Q: What did the implants treat? The ruling described scars, tissue atrophy, folds, surgical irregularities, and other soft-tissue defects.

Q: Did the products have a physician-order restriction? Yes.

Citations and references

• Fla. Stat. § 212.08(2)(a), (f) — medical products dispensed by prescription and physician treatment
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 02A-013

Original ruling text

SUMMARY

QUESTION: What is the taxable status of collagen-based
implant products.

ANSWER - Based on Facts Below: Collagen-based implant
products would be exempt from tax as a medical product that
will be dispensed to a patient by a physician.

Mar 08, 2002

Re: Technical Assistance Advisement 02A-013
XXX ("Client")
Sales and Use Tax
Medical Products; Collagen
Section 212.08(2), F.S.

Dear :

This is in response to your letter of February 1, 2002,
requesting the issuance of a Technical Assistance Advisement
regarding the taxable status of collagen-based implants sold by
your client in Florida. Your letter provides in part:

... This request relates to the sale of XXX and XXX, which
are collagen-based implants administered by a collagen
specialist under the guidance and supervision of a
prescribing physician.
...
Collagen is an insoluble fibrous protein that is the chief
constituent of the fiber of connective tissue in the skin.

The involved implants, injected into the skin, repair
defects by replenishing the natural collagen produced by
the body and are used in the treatment of defective,
diseased, traumatized, or aging human tissue. They correct
distensible acne scars, atrophy from disease or trauma,
glabellar frown lines, nasolabial folds, rhinoplasty, skin

graft or other surgically induced irregularities, and other
soft tissue defects.

The implantation involves dispersing the collagen into a
saline solution that contains the anesthetic Lidocaine.
This is then injected with a fine gauge needle into
depressed layers of skin to replenish the skin's collagen
level and elevate the area to the level of the surrounding
skin surface. The XXX and XXX collagen implants, sold by
Client, are natural products derived from highly purified
bovine collagen.

Literature on the product states the following:

CAUTION: Federal law restricts this device to sale,
distribution, or use by, or on the lawful order of a
licensed physician or an oral and maxillofacial surgeon.

Law

Section 212.08(2), F.S., provides in part:

(2) EXEMPTIONS; MEDICAL.

(a) There shall be exempt from the tax imposed by this
chapter any medical products and supplies or medicine
dispensed according to an individual prescription or
prescriptions written by a prescriber authorized by law to
prescribe medicinal drugs;....
...
(f) Sales of drugs to or by physicians, dentists,
veterinarians, and hospitals in connection with medical
treatment are exempt.

Conclusion

Based on the above statutory provisions, collagen products would
be exempt from tax as a medical product dispensed by a
physician.

Closing Statement

This response constitutes a Technical Assistance Advisement
under s. 213.22, F.S. which is binding on the department only
under facts and circumstances described in the request for this
advice as specified in s. 213.22, F.S. Our response is
predicated on those facts and the specific situation summarized
above. You are advised that subsequent statutory or
administrative rule changes or judicial interpretations of the
statutes or rules upon which this advice is based may subject
similar future transactions to a different treatment than
expressed in this response.

You are further advised that this response, your request and
related backup documents are public records under Chapter 119,
F.S., which are subject to disclosure to the public under the
conditions of s. 213.22, F.S. Your name, address, and any other
details which might lead to identification of the taxpayer must
be deleted by the Department before disclosure. In an effort to
protect the confidentiality of such information, we request you
provide the undersigned with an edited copy of your request for
Technical Assistance Advisement, backup material and response
within fifteen days of the date of this advisement.

Sincerely,

Jonathan E. Swift
Tax Law Specialist
Technical Assistance and Dispute Resolution
(850) 922-4840

Control #48635