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The Complex Factors that Influence Drug Prices

Pharmaceutical companies typically use a variety of factors to determine the price of their drugs, including: Development and production costs: Pharmaceutical companies invest significant amounts of money into the research, development, and production of new drugs. The cost of these activities, including clinical trials and obtaining regulatory approval, is factored into the price of the drug. Marketing and Distribution Cost: Marketing and distribution costs may also be considered by pharmaceutical companies when determining drug prices. These costs include expenses related to advertising, sales representatives, and distribution networks. Drug Uniqueness: If a drug is the first of its kind or represents a significant improvement over existing treatments, the pharmaceutical company may set a higher price for it. If a drug has many competitors or is like existing treatments, the company may have to set a lower price to remain competitive. Market demand: Companies also consider the dem

What are the Drugs?

According to Drug and Cosmetic Act & Rules , Drug Includes:

(i) All medicines for internal or external use of human beings or animals and all substances intended to be used for or in the diagnosis, treatment, mitigation or prevention of any disease or disorder in human beings or animals, including preparations applied on human body for the purpose of repelling insects like mosquitoes;
(ii) Such substances (other than food) intended to affect the structure or any function of the human body or intended to be used for the destruction of vermin or insects which cause disease in human beings or animals, as may be specified from time to time by the Central Government by notification in the Official Gazette;
(iii) All substances intended for use as components of a drug including empty gelatin capsules; and
(iv) Such devices intended for internal or external use in the diagnosis, treatment, mitigation or prevention of disease or disorder in human beings or animals, as may be specified from time to time by the Central Government by notification in the Official Gazette, after consultation with the Board;

Classification of Drugs:

A drug is classified into following categories based upon their marketing nature:
  • Branded Drugs
  • Generic Drugs
  • Branded Generic Drugs
  • Pseudo generic Drugs
Branded Drugs: Branded Drugs are the drugs which are sold with fixing a brand name by its innovator. When a pharmaceutical company develop a new molecule which is safe and effective for human use and market it by giving it a brand name which is different from its International Non proprietary Name (INN) or common name (generic name). These drugs are known as Branded Drugs.

Generic Drugs: Generic Drugs are the drugs which are sold with only International Non proprietary Name (INN) or common name without fixing a brand name. A pharmaceutical company has given exclusive right of molecule that is developed by them. It is known as Patent. A patent has valid for a certain period of time. After expire of that patent, other pharmaceutical companies are also allowed to manufacture this molecule and market it. Products other than innovator’s brand of that molecule are known as Generic versions i.e. Generic Drugs.

Branded generic Drugs: Branded Generic Drugs are the generic drugs which are sold by fixing a brand name. In some countries like India, all pharmaceutical companies are allowed to fix name of their pharmaceutical products whether these are innovators product or generic versions. The products which are fall under generic category as defined above but have a brand name at label are known as Branded Generics Drugs.

Pseudo Generic Drugs: Pseudo Generic Drugs are replica of innovator’s original researched molecule. When patent expiry period is over or near to end, pharmaceutical company who developed molecule launched a generic version of that molecule which is exact replica of original brand i.e. manufactured with same active ingredients and inactive ingredients (Binder, colouring agents, excipients, bulking agent etc) and identical to original brand to prevent entry of competitors into market of that molecule. This exact replica of original brand is known as Pseudo Generic medicines.

Other than this classification, drugs are also classified into nature of availability i.e.
  • Prescription Drugs
  • OTC Drugs
Prescription drugs and OTC drugs include all branded drugs, generic drugs, pseudo generic, branded generic etc. But nature of availability is bases of classification.

Prescription Drugs: Prescription Drugs are the drugs which can be sold out only against prescription of registered medical practitioner by pharmacy or chemist shop. No One can be sold these drugs without prescription. Selling these without prescription is criminal offence. Prescription drugs includes drugs listed in schedules like Schedule H, Schedule H1, and Schedule C and C1, Schedule G, and Schedule X drugs etc.

OTC Drugs: Over The Counter (OTC) drugs are the drugs which can be sold out without prescription of registered medical practitioner. These drugs includes some sort of pain killers, cough syrup, herbal medicines, contraceptives and other drugs as specific by health authorities.

Hope above information is helpful to you...
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