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Why Companies are Selling Same Drug in Different Prices?

Learn about fixing the price of pharmaceutical formulations by the companies and the formula suggested by the government.
There is a big difference in the prices of the pharmaceutical products in India. The products having same drugs with same label claim are being sold in different prices. Sometimes this difference increases the prices twice, thrice or even ten folds.

MRPAccording to the government, the price should be calculated by the formula suggested by the Drug Price Control Order (DPCO). Retail price of the pharmaceutical formulations is calculated by the following formula:

Retail Price = (MC+CC+PM+PC) x (1+MAPE/100) + ED
MC = Material cost including the cost of drug, excepients and loss during the processing.
CC = Conversion cost
PM = Cost of packaging material including the process loss
PC = Packing charges
MAPE = Maximum Allowable Post-manufacturing Expenses
ED = Excise Duty

Government fixes the retail price by the above formula but all the pharmaceutical companies try to increase the retail price to increase their profit.

The prices of the pharmaceutical formulations are calculated by the same formula but there is a great variation in the prices of different companies because generally companies change MAPE to increase the drug price. The government suggests the value 100 for MAPE to calculate the retail price. It increases the retail price twice but when manufacturer increase it, the price will also increase accordingly. Some companies increase the price by adding their research and development expenditure and the cost of product development and regulatory approvals.

Atenolol Tablets 50 mg (strip of 14 tablets) manufactured by the FDC Limited are sold for `8 and the same drug manufactured by Nicholas Piramal India Ltd. is being sold for `64. Nicholas is selling same drug in eight times higher prices.

Some companies says that there expense in marketing is more than other company but you can imagine the difference in expense in marketing and product promotion and it could not be eight times more than the other one.

In some cases the two products of same company having same drugs and their label claim are being sold in different prices. For instance Atenolol tablets 50 mg (strip of 14 tablets) manufactured by IPCA Laboratories Ltd. with the name Teno 50 are being sold for `25 and with the name Tenolol 50 for `43.

It shows that the prices are being increased to increase the profit margin of the company. Comment your views for the situations.
Ankur Choudhary is India's first professional pharmaceutical blogger, author and founder of Pharmaceutical Guidelines, a widely-read pharmaceutical blog since 2008. Sign-up for the free email updates for your daily dose of pharmaceutical tips.
Email: .moc.enilediugamrahp@ofni Need Help: Ask Question

16 Comments so far : Add yours...

Shivaji Kadam said...

Really valuable info.,thanks

chirag said...

DPCO should take action against companies and should come out with a law which helps to regulate the price of same product of different companies

Kamalakar said...

It is not fair on the part of companies by claiming simply R&D expenses. Now time has come all the generic medicines marketed in India to be equivalent to Innovator product.
I understand first generic launched by a x company is manipulating the equivalence data.
Indian generic companies are complicating the formulation development for simple dosage forms and raising the MAPE. Not fair

Kamalakar said...

It is not fair on part of Indian big companies to charge more MAPE, based on R&D. Indian companies are complicating the simple products to complicated in the name of R&D.
All companies who are claim more MAPE shall submit their equivalence data in vitro/in vivo in line the with Innovator data.
I understand that first time generic product introduced in India has wrong bio data which are manipulated and obtained permission.
DCGI shall gear up their capabilities in these line and curtain this high prices without any proper justification.

Jaikrit Negi said...

its very use full information's,
Consultant Adsakti Herbals

Sridhar Nimmakayala said...

Why Government dose not responding to this situation ?
Government regulations should be rigid rather flexible............

Old Fox said...

Good article! But there are two questions:
1. When Govt. has fixed 100 as MAPE, why the companies defy it to increase the drug's retail price and who is going to check it? Is there any control mechanism in place?
2. How R&D expenditure for off-patented drugs can be considered as Maximum Allowable Post-manufacturing Expenses (MAPE) to increase retail price?

prince naresh said...

Looks like dpco fails

M.Sathish Kumar said...

Ya good information...... Every pharmacist must know this.......

srinivasu KOTTAMASU said...

please send wat are the FDA regulation and spanish regulation

rahool said...

It's nice article for every pharmacist to know
how to increases price of drug by compony wise

Md. Shakil said...

Nice information

sam said...

Then all of us as pharmacist should come ahead for this topic or issue why we only write...and discuss why don't we do something

venugopalareddy lanka said...

DPCO should take a serious actions on that particular companies to take availability of the medicines for all the common men

sweta omar said...

in medicin field have lots of corruption..
so take action against the companies...that corruption create lots of proplem for poor people..

Ranganathan said...

many people may think that the drug's higher price is genuinely produced as per specification and not otherwise in lesser price drugs. can anyone explain this anomaly?

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