Standard costing And pharmaceutical pricing

Standard costing is an important subtopic of cost accounting. Standard

costs are usually associated with a manufacturing company's costs of direct material, direct labor, and manufacturing

overhead.Rather than assigning the actual costs of

direct material, direct labor, and manufacturing overhead to a product,

many manufacturers assign the expected or standard cost.

This means that a manufacturer's inventories and cost of goods sold will

begin with amounts reflecting the standard costs, not the actual costs, of

a product. Manufacturers, of course, still have to pay the actual costs. As a

result there are almost always differences between the actual costs

and the standard costs, and those differences are known as variances.

Standard costing and the related variances is a valuable management tool.

If a variance arises, management becomes aware that manufacturing costs have differed from the standard (planned,

expected) costs. If actual costs are greater than standard

costs the variance is unfavorable. An unfavorable variance tells management that if everything else stays constant the company's actual profit will be less than

planned.

If actual costs are less than standard costs the variance is favorable. A

favorable variance tells management that if everything else stays constant the actual profit will likely exceed the

planned profit.The sooner that the accounting system

reports a variance, the sooner that management can direct its attention to

the difference from the planned amounts.

If we assume that a company uses the perpetual inventory system and that it carries all of its inventory accounts at

standard cost (including Direct Materials Inventory or Stores), then the standard cost

of a finished product is the sum of the standard costs of the inputs:

      1. Direct material      2. Direct labor

      3. Manufacturing overhead           a. Variable manufacturing overhead

           b. Fixed manufacturing overhead

Usually there will be two variances computed for each input:

Input for Product Variance #1 Variance #2

Direct material Price (or cost)Usage (or quantity)

Direct labor Rate (or cost)Efficiency (or quantity)

Manufacturing overhead-variable

Spending Efficiency

Manufacturing overhead-fixed

Budget Volume

Fundamentals of Pharmaceutical Pricing

1 - Cost of raw materials and basic materials (incoming ingredients, packaging, упаковочных материалов и др.); packaging materials, etc.);

2 - другие материальные затраты (вспомогательные материалы,

освоение и под- - Other financial expenses (auxiliary materials,

developing and under- готовка производства, цеховые и

другие расходы); cooking production, craft and other expenses);

3 - трудовые затраты (основная и дополнительная заработная плата); - Labor costs (basic and additional wages);

4 - The cost of research;

5 - The cost of pharmaceutical information; 6 - прибыль фармацевтических предприятий; - Profits of pharmaceutical companies; 7 - налоги: налог на прибыль (30%) и др.; - Taxes: income taxes (30%) and others;

8 - торговая наценка оптовой торговли (издержки, прибыль, натоги ); - Wholesale trade margin (costs, profits, taxes); 9 - торговая наценка аптек (издержки, прибыль, налоги). - mark-up pharmacies (cost, profit, taxes).

The pharmaceutical market in the developed countries due to the specifics of his goods for which demand is growing even in times of crisis, in matters of pricing

formation has several features. The level of prices of medicines affects many factors,

however, such major components of value, as the cost of raw materials, energy, wages are not of critical importance. The primary factor that determine the price of prescription

drugs ready abroad are: high efficiency of new drug and the level of USO provement over existing, the possibility of the

appearance- of competition from drug-analogues, the popularity of the market and among doctors, the costs of

research and development.

Currently, the main source of revenue in the big pharmaceutical companies are the original patented medicines (brand holes), supplied by the market at monopoly prices.

However, the period of monopoly in the market limited to the duration of patent protection or will leniem competitors.

Therefore, production of medicines, along with electron Noah and air space industry is among the industries with intensive development of scientific papers.

For more than forty years of existence of the single European market to EU countries have not

developed a unified approach to the formation of prices for medicines. In

order to create a unified internal market medicine, most EU countries have enacted legislation regarding

the regulation of prices for pharmaceutical products

Maximum allowance of wholesalers is not higher than 8% and retail trade - 25%. It is this the method of regulation is typical for

Russia, and several other Eastern European countries.. Although the level of marginal increments are somewhat higher than in

Western Europe. For example, in Bohemia marginal increase of wholesale trade was 12.9%, retail - 24-26%. . In Bulgaria, the

marginal wholesale allowance equal to 18%, and retail - 28% of the price of

manufacturer.

Creating a positive transition river is a kind of method of regulating the prices of medicines.

Government agencies use the opportunity to include specific medicines the spatial drug to a "grace} '"

list as a means of pressure on pharmaceutical companies. Provided that reducing the price of the drug, including its to the positive list that in turn,

provides a guaranteed high volume purchases. Необходимо указать, что в многих странах при

создании положительных перечней преимущество предоставляется медикамен те Should indicate that in many countries, creating

positive lists of priority is given to those medikamen

 

value - the sum of all costs of producing goods

 Price - a monetary value of cost of goods, economic category, which is used for indirect

Measurements spent on production values Public the necessary working time.

PROCEDUREpricing of medicines and medical products, for which the government introduced a regulation1. Set:1) for pharmaceuticals and medical products, included in a national list of essential medicines and medical devices (except narcotics, psychotropic drugs, precursors and medical gases), limiting supply and Supply premium no higher than 12 percent of wholesale priceswholesale prices and marginal trading (retail) allowances are not higher than 25 percent of the purchase price (Retail Price );

2) for pharmaceuticals and medical products (except drugs, psychotropic

drugs, precursors and medical gases), acquired wholly or partly for the budget,

limit supply and Supply premium no higher than 10 percent of wholesale prices and

marginal trading ( retail) premium no higher than 10 percent of the purchase price.

Medicines and medical products of domestic manufacture, wholesale price

which is lower than 12 USD per package, not subject to state regulation, except

those purchased by the budget. "