Section 7 in The Drugs (Prices Control) Order, 1995
7. 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 pharmaccutical aids used including overages, if any, plus process loss thereon specified as a norm from time to time by notification in the Official Gazette in this behalf;"C.C." means conversion cost worked out in accordance with established procedures of costing and shall be fixed as norm every year by notification in the Official Gazette in this behalf;"P.M." means cost of the packing material used in the packing of concerned formulation, including process loss, and shall be fixed as a norm every year by notification in the Official Gazette in this beahlf;"P.C." means packing charges worked out in accordance with established procedures of costing and shall be fixed as a norm every year by notification in the Official Gazettee in this behalf;"MAPE" (Maximum Allowable Post-manufacturing Expenses) means all costs incurred by a manufacturer form 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 in indigenously manufactured Scheduled formulations;"E.D." means excise duty;Provided that in the case of an imported formulation, the landed cost shall form the basis for fixing its price alongwith such margin to cover selling and distribution expenses including interest and importer's profit which shall not exceed fifty per cent of the landed cost">Provided that in the case of an imported formulation, the landed cost shall form the basis for fixing its price alongwith such margin to cover selling and distribution expenses including interest and importer's profit which shall not exceed fifty per cent of the landed cost.Explanation .-For the purpose of this proviso, "landed cost" means the cost of import of formulation inclusive of customs duty and clearing charges.
