Thursday, April 9, 2009

Governor, Legislature Support Sales Tax Exemptions For Clinical Trials and Free Samples of Drugs

(BUSINESS WIRE)--Georgia Bio applauds the General Assembly for adopting legislation that exempts from sales tax free samples of prescription drugs and biologics and of investigational products in clinical trials and applauds Governor Sonny Perdue for his support of the measure. The legislation, House Bill 59, makes permanent an executive order issued by Governor Perdue in September 2008.

The action by Governor Perdue and the legislature, which voted unanimously in the House and Senate to approve HB 59, will help ensure that Georgia patients and the state’s healthcare centers do not lose thousands of clinical trials. In promoting the legislation, Georgia Bio called attention to the fact that imposing a tax on investigational products used in research and in clinical trials placed an immediate disincentive on conducting research or clinical trials in Georgia. It not only threatened the loss of significant revenues to Georgia academic institutions and hospitals, but also discontinuation of clinical trials in Georgia could have denied patients access to the most advanced life saving medicines. The legislation exempts from sales tax investigational drugs, biologics, medical devices and animal health medicines dispensed without charge in clinical trials.

The sales tax exemption on free samples of prescription drugs and biologics is consistent with Georgia law exempting tax on sales of these medicines. In the case of free samples, these are often provided to patients by physicians as “starter packs” to determine if a new medicine is useful for and can be tolerated by a patient before a prescription for the new medicine is written. In other cases, free samples of medicines are provided to the elderly and uninsured who otherwise cannot afford them. In all cases, these medicines are never resold.

In his executive order, Governor Perdue stated:

“It is in the best interests of Georgians to exempt from sales and use taxes pharmaceutical medications that are distributed without cost for several reasons, including: (1) the ability to distribute needed medicines to persons that might not otherwise be able to afford them; (2) the attraction of clinical trials to Georgia for the betterment of the health of Georgians and to continue the State's place as a leader in cutting-edge health research; and (3) the elimination of an inconsistency in the law whereby pharmaceutical medicines that are sold at retail are not taxed, however those that are distributed for free are subject to taxation.”

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