In a letter ruling approved by David Gerragano the Commissioner of Tennessee department of Revenue on June 16th, 2022, it was determined that drugs sold in relation to a clinical trial are exempt from sales and use tax. While this letter ruling only can be directly applied to the specific taxpayer who requested clarity from the Department of Revenue, this could be a guiding light for taxpayers with similar circumstances.
The taxpayer at hand manufactures products that are aimed to diagnose, cure, mitigate, treat, or prevent a specific disease. The products have been FDA approved for use in clinical trials. An exemption certificate was applied for and received for the Manufacturing Machinery Energy Fuel, and Water Sales.
The clinical trials are conducted pursuant to a licensed physicians orders and the products are not available without a prescription. The ruling states that these products “are exempt from Tennessee sales and use tax as prescription drugs under TENN. CODE ANN. §67-6-320(a)(2018).” It also clarifies that the subsequent transfer of the product from physician to the patients does not qualify as a bona fide sale, and therefore no resale certificate is necessary.
(Tennessee Department of Revenue, Letter Ruling No. 22-04, approved June 17, 2022)