Calculation of retail price of formulation

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Chapter: Forensic Pharmacy : The Drugs (Price Control) Order (OPCO), 1995

The retail price of a formulation is calculated by the Government using following formula.


Calculation of retail price of formulation

The retail price of a formulation is calculated by the Government using following formula.

R.P. = (M.C + C.C. + P.M. + P.C.) x (1 + MAPE/100) + E.D.

Where,

R. P. = retail price

M.C. = Material cost and includes cost of drugs and other pharmaceutical aids used including, overages and process loss specified as a norm from time to time.

C.C= Conversion cost worked out in accordance with established procedures of costing and fixed as a norm every year.

P.M. = Cost of packing material of formulation including, process loss and shall be fixed as a norm every year.

P.C. = Packing charges worked out in accordance with established procedures of costing and fixed as a norm every year.

MAPE = (Maximum Allowable Post-manufacturing Expenses) - All costs incurred by manufacturer from ex-factory to retailing stage and includes, margin for manufacturer and trade margin and it shall not be more than one hundred per cent for indigenously manufactured Scheduled formulation.

E.D. = Excise duty to be paid.

In case of imported formulation the landed cost shall form the basis for fixing its price along with margin to cover selling and distribution expenses and importer's profit which shall not exceed fifty per cent of landed cost.

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