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How are the prices of various drugs calculated?

The pricing of various drugs (excluding traditional Chinese medicine (TCM) materials and herbal decoctions) must follow certain guidelines. The guidelines for calculating the manufacturer's price, wholesale price and retail price are shown below.

(1) Manufacturer's Price

  • Manufacturer's price before tax = manufacturing cost + period expenses)/(1-sales profit margin);
  • Manufacturer's price after tax = manufacturer's price before tax x (1+ value-added tax rate);

(2) Wholesale Price

  • Pre-tax wholesale price = pre-tax manufacturer's price x (1+purchase and sale differential rate)
  • After-tax wholesale price = pre-tax manufacturer's price x (1+value-added tax rate)

(3) Retail Price

  • Retail price = after-tax wholesale price x (1+ wholesale and retail differential rate).

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