INDEX

What is DPCO
Objective
DPCO 2013
Pricing of SCHEDULE Formulation
Pricing of NON-SCHEDULE Formulation
Calculation of retail price of formulation
Case study of Pricing of Cefixime 200 mg
tablet and Ondansetron HCL injection
(2mg/ml)
 DPCO
 The drug price control order (DPCO) is an order
issued by the government under the Essential
Commodities Act which enables it to fix the
prices of some essential bulk drugs and their
formulations.
 The origin of this control dates back to 1970 when
for the first time the government placed limits on
profitability of pharmaceutical companies.
 Objective of DPCO
• To ensure availability, at reasonable prices of
essential and life saving and prophylactic
medicines of good quality.
• Promoting the rational use of drugs in the
country To encourage cost-effective production
with economic sizes
 DPCO 2013
 The government has notified the DPCO 2013 under the
Essential Commodities Act, 1955, which will give power
to the NPPA to regulate prices of 348 essential drugs
along with their specified strengths and dosages under
NLEM 2011.
Main Features of the DPCO 2013
1) The new order will bring 348 drugs & their 652
formulations under price control.
2) The new policy uses a market-based pricing mechanism
against the earlier proposed cost-plus method. The ceiling
price would be calculated by taking the simple average of
prices of all brands of a drug with a market share of 1% or
more.
3) Margins of wholesalers & retailers have been
cut down to 8% & 16% respectively.
4) Monitoring the M.R.P of Non-Scheduled
formulation.
5)Control over Bulk Drug manufacturer.
6) Control over Formulation manufacturer
7)Drug producers will be permitted an annual
increase in the retail price in sync with the
wholesale price index.
 Scheduled Formultion
• Scheduled formulation shall mean Formulation with
Same strength and Same dosage form as in the
schedule.
• If Dosage Form & Strength of a scheduled
formulation are changed, it ceases to be a Scheduled
Drugs
• Example.
• Amoxicillin Capsules 250mg is covered under
schedule
• Amoxicillin Tablet 125mg shall not be called a
Scheduled Drug
 Non - Scheduled Formulation
• "Non-Scheduled Formulation" means a
formulation, containing the molecule, the
dosage and strengths of which are not
specified in the First Schedule; (Non- NLEM
Drug / Formulation)
• Example: Aceclofenac,Norfloxocin,
Rabeprazole
 New Drug / New Formulation
• A). NLEM (National List of Essential
Medicines) Formulations with same specified
dosage and strength as combined with another
NLEM Formulations with same specified dosage
and strength.
• Example 1:
• Paracetamol 500mg Tablet is Scheduled
Formulation
• Diclofenac 50mg Tablet is Scheduled Formulation
• New Drug = Paracetamol 500mg + Diclofenac
50mg Tablet is New Drug/Formulation
B) NLEM Formulations with same specified
dosage and strength as combined with another
Non - NLEM Formulations
• Example 1:
• Paracetamol 500mg Tablet is Scheduled
Formulation
• Aceclofenac 100mg Tablet is Non - Scheduled
Formulation
• Paracetamol 500mg + Aceclofenac 100mg
Tablet is New Drug
C) NLEM Formulations by changing its strength
• Example 1:
• Paracetamole 500mg Tablet is a Scheduled
Drug
• Paracetamole 325mg Tablet is a New Drug
D) NLEM Formulations by changing its dosage
• Example 1:
• Diclofenac 50mg Tablet is a Scheduled Drug.
• Diclofenac 50mg Ointment is a New Drug.
 Not New Drug
• Example 1
• Paracetamole 500mg is Scheduled Drug
• Aceclofenac 100mg is not Scheduled Drug
• Paracetamole 325mg + Aceclofenac 100mg is
not Scheduled Drug and is not a New Drug
under DPCO for price approval
 PRICING OF SCHEDULED
FORMULATION
The ceiling price of a scheduled formulation of specified
strengths and dosages as specified under the first schedule
shall be calculated as under:
• Step1: First the Average Price to Retailer of the scheduled
formulation i.e. P(s) shall be
calculated as below:
Average Price to Retailer, P(s) = (Sum of prices to retailer of
all the brands and generic versions of the medicine having
market share more than or equal to one percent of the total
market turnover) / (Total number of such brands and
generic versions of the medicine having market share more
than or equal to one percent of total market turnover on
the basis of moving annual turnover for that medicine.)
• Step2. Thereafter, the ceiling price of the
scheduled formulation i.e. P(c) shall be
calculated as below:
P(c) = P(s).(1+M/100), where
P(s) = Average Price to Retailer for the same
strength and dosage of the medicine as calculated in
step1 above.
M = % Margin to retailer and its value =16
Margin to retailer: While fixing a ceiling price of
scheduled formulations and retail prices of new
drugs, sixteen percent of price to retailer as a
margin to retailer shall be allowed.
Maximum retail price:
(1)The maximum retail price of scheduled formulations
shall be fixed by the manufacturers on the basis of
ceiling price notified by the Government plus local
taxes wherever applicable, as under:
Maximum Retail Price = Ceiling price + Local Taxes as
applicable
(2)The maximum retail price of a new drug shall be
fixed by the manufacturers on the basis of retail price
determined by the Government plus local taxes
wherever applicable, as under:
Maximum Retail Price = Retail Price + Local Taxes as
applicable
 Calculation of retail price of
formulation
• The retail price of a formulation shall be
calculated by the Government in accordance
with the following formula namely:
• R.P. = (M.C. + C.C. + P.M. + P.C.) x (1 +
MAPE/100) + ED. where"R.P." means retail
price;
• "M.C." means material cost and includes
the cost of drugs and other pharmaceutical
aids used.
• "C.C." means conversion cost worked out
in accordance with established procedures
• "P.M." means cost of the packing material used in
the packing of formulation, including process loss.
• "P.C." means packing charges worked out in
accordance with established procedures of costing.
• "MAPE" (Maximum Allowable Post-manufacturing
Expenses) means all costs incurred by a
manufacturer from the stage of ex-factory cost to
retailing and includes trade margin and margin for
the manufacturer and it shall not exceed one
hundred per cent for indigenously manufactured
Scheduled formulations;
• "E.D." means excise duty: Provided that in the case
of an imported formulation.
 CONCLUSION
• The cost of cefixime 200 mg tablet is Rs. 23.84 and if we
consider MAPE as 100%,the basic price becomes
Rs. 47.56 + 47.56 X 6.18%(E.D.)= Rs. 50.49
• AS PER NPPA NOTIFICATION CEFIXIME 200 MG
PRICE IS 112.50
• The cost of Ondansetron HCL injection is Rs. 2.13 and if
we consider MAPE as 100%,the price becomes
Rs. 4.26 + 4.26 X 6.18% (E.D.)= Rs. 4.52
• AS PER NPPA NOTIFICATION
ONDANSETRON(2MG/ML) 1 ML PRICE IS RS 7.37