Why Companies are Selling Same

Drug in Different Prices?

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.

According 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

Where,
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

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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.

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