New York – Taxability of Medications to Treat Osteoarthritis

SALT Report 1589 – The New York Department of Taxation and Finance issued an Advisory Opinion regarding the taxability of certain medications used to treat osteoarthritis of the knee.  These medications, Orthovisc, Euflexxa and Hyalgan, are FDA classified as medical devices and are approved for the treatment of osteoarthritis when administered by a physician.
Orthovisc –  is a medication made from hyaluronan, a naturally occurring lubricant found in healthy knee joints.
Euflexxa – is a form of hyaluronic acid that is similar to the fluids normally found in healthy knees.
Hyalgan – is a substance derived from hyaluronan which is a chemical found in healthy joint tissue and fluid.
These products are injected into the knee and are designed to supplement the knee’s fluid, thereby improving the operation and function of the knee, relieving pain, and maintaining a patient’s mobility. All three medications must be prescribed by a physician and are for use by patients who have not found relief from other treatment or pain killers.
The Department determined that these products qualify for the exemption provided under Tax Law Section 1115(a)(3) which states:  “Drugs and medicines intended for use, internally or externally, in the cure, mitigation, treatment, or prevention of illness or disease in human beings…medical equipment and supplies…used to correct or alleviate physical incapacity, and products  consumed by humans for the preservation of health…” are exempt from tax.
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