Legend drugs are drugs or gases required by federal law to be sold or dispensed in a container labeled with one of the following statements:
- “Caution: Federal law prohibits dispensing without prescription”
- “Rx only”
Legend drugs or gases must be:
- Purchased from a wholesaler who is subject to MinnesotaCare Wholesale Drug Distributor Tax
- Classified by the FDA as a drug and not a device
Nutritional products, blood, and blood components are not considered legend drugs. However, blood derivatives derived from blood, plasma, or serum through a chemical manufacturing process are considered legend drugs.
There are two methods you can use to calculate the Legend Drug Exemption. If you cannot use Method 1, you must use Method 2.
Method 1
You may claim the actual amount you paid for the legend drugs, less any reimbursements you received for the drugs that are exempt under MinnesotaCare tax law (such as drugs reimbursed by Medicare). These reimbursements are included in the other exemption amounts reported on your return.
Method 2
If you cannot determine the actual drug costs and exempt reimbursement amounts, you must use a calculation to determine your allowable exemption.
You can use the step-by-step instructions below to complete the calculation, or you can use our Legend Drug Exemption Calculator to make this calculation for you.
Step |
Instructions |
Amount |
1 |
Legend Drug Purchases. Total amount you paid during the year for legend drugs or gases. |
|
2 |
Annual Gross Receipts. Total gross receipts you received during the year (that you are reporting on your annual return). |
|
3 |
Total Exemptions. Total of all other exemptions for the year (that you are reporting on your annual return). |
|
4 |
Subtract Step 3 from Step 2. |
|
5 |
Divide Step 4 by Step 2 (should be preceded by a decimal point). |
|
6 |
Allowable Legend Drug Exemption. Multiply Step 1 by Step 5. |
|
Enter the number from Step 6 above, or the Legend Drug Exemption Calculator’s result, on the Legend Drug Exemption line when you file your annual return.