Louisiana: Medical Devices Exempt Under the Constitutional Exemption for Prescription Drugs

The Louisiana Court of Appeals recently held that the constitutional prohibition against imposing sales and use taxes on “prescription drugs” extended to medical devices. Louisiana’s Constitution prohibits the imposition of state sales and use tax on prescription drugs. Although not defined in the constitution, the term “prescription drugs” is defined by law as “all pharmaceuticals and medical devices which are prescribed for use in the treatment of any medical disease.” Effective April 1, 2016 through June 30, 2018, Louisiana suspended numerous sales and use tax exemptions and exclusions. However, “prescription drugs” remained exempt. In 2017, the legislature reinstated the exemption for medical devices. The issue before the court was whether the medical devices were exempt under the constitution- meaning they were not taxable during the suspension period.

The court first noted that the term “prescription drugs” was subject to more than one reasonable interpretation, and therefore it was required to determine the intent behind the adoption of the provision. After reviewing the legislative history, the court concluded that the intent behind incorporating the prescription drug exemption into the constitution was to preclude lawmakers from imposing tax temporarily on certain exempt items. In the court’s view, medical devices, which were part of the statutory definition of prescription drugs, were intended to be included in the constitutional prohibition against sales and use taxes on prescription drugs. The court noted that the Department’s narrow interpretation of “prescription drugs” would result in an expansion of taxes.  For more information on Lafayette General Medical Center, Inc. v. Robinson, please contact Randy Serpas at 504-569-8810.