Are You Prepared for a Major Industry Change to the National Drug Code (NDC) Number?

Tuesday, October 16, 2018
Author: 

Marsha K. Millonig, MBA, BPharm

It may not be exciting or cutting-edge, but the pharmaceutical supply chain and pharmacy profession’s operations are tied to an infrastructure that depends on a 10- or 11-digit number: the National Drug Code or NDC number.

Nearly every step in pharmaceutical product manufacturing, distribution, and pharmacy operation uses the NDC code. But now, the Food and Drug Administration (FDA) is running out of NDC numbers, requiring a new look at how it is structured.

Nearly every system will be impacted. It is like Y2K for pharmacy!

NDC History

Let’s take a quick review of what the NDC is, how it is structured and used.

Drug products are identified and reported using this unique, three-segment number, which is a universal product identifier for human drugs. The three segments of the NDC identify:

  • Labeler
  • Product
  • Commercial package size

The NDC number’s first set of digits identifies the labeler, which could be the manufacturer, repackager, or distributer. The second set of digits is the product code, which identifies the strength, dosage form, and drug formulation for a specific company. The third set of digits is the package code, which identifies package sizes and types. The FDA assigns the labeler code, while the company assigns the product and package code.

The NDC is actually a 10-digit number that contains the three segments noted above. It will be listed in one of the following configurations:

  • 4-4-2: for example, 1234-5678-90
  • 5-3-2: for example, 12345-678-90
  • 5-4-1: for example, 12345-6789-0

Since the NDC is limited to 10 digits, a firm with a 5-digit labeler code must choose between a 3-digit product code and 2-digit package code, or a 4-digit product code and 1-digit package code.

Because the number may be in three different formats, it conflicts with the Health Insurance Portability and Accountability Act (HIPAA) standard which calls for an 11-digit NDC. One of the major goals of HIPAA was to enforce health information standards. As a result, many systems that used NDC numbers would add a leading zero to the shortest code segment creating a de facto 11-digit NDC number. The FDA notes that since a zero can be a valid digit in the NDC, confusion may result when trying to reconstitute the NDC back to the FDA 10-digit standard format. For example: 12345-0678-09 (11 digits) could be 12345-678-09 or 12345-0678-9 depending on the firm’s configuration. 

NDC Use

NDC numbers are used on a widespread basis. Prescribing, dispensing, reimbursement, safety, clinical management, supply chain management, pharmaceutical manufacturing and labeling, among other systems, are all depending on the use of the NDC number. Think about all the areas that use and rely on the NDC:

  • NDC assignment to a new drug product and its appearance on the product’s label
  • FDA product approval systems and the NDC product directory
  • Pharmaceutical distribution systems
  • All item-level databases that drive other health information systems
  • Any drug information or clinical information system
  • E-prescribing platforms
  • Pharmacy dispensing/workflow systems and related labeling provided to the consumer
  • Pharmacy inventory systems and shelf placement methods
  • Immunization and other product registries
  • Medication error reporting systems, including FDA and private sector
  • Returned goods systems

No doubt you can think of many more.

A significant issue with many legacy systems that predate the NDC number “shortage” issues is that they were hard-coded for the 11-digit format — a reason it was the standard chosen in HIPAA. Hard coding is a software development practice of embedding data directly into the source code of a program or other executable object, as opposed to obtaining the data from external sources or generating it at run-time. Hard-coded data typically can only be modified by editing the source code. Data that are hard-coded usually represent unchanging pieces of information. Well, not in the NDC number’s case any longer.

The NDC Shortage

The FDA has said that within the next 10 to 15 years, the NDC format will have to be changed to accommodate longer numbers because of the increase in new labelers entering the United States market and the fact the FDA is running out of 5-digit labeler codes. The 5-digit labeler code format provides FDA with 90,000 labeler codes, and it anticipates running out by 2033.

In a 2016 notice, the FDA stated when that happens, it will begin assigning 6-digit labeler codes. As a result, the agency will be adding two 11-digit formats to the NDC arsenal (6-3-2 and 6-4-1). The FDA has acknowledged that some stakeholders have promoted the idea of a single, standard NDC format during the comment period on that rule. (See the FDA’s Requirements for Foreign and Domestic Establishment Registration and Listing for Human Drugs, Including Drugs That Are Regulated Under a Biologics License Application, and Animal Drugs.)

FDA Is Listening: Next Steps

The FDA is beginning the long process of seeking input on the NDC number’s future format. Public comments are being sought through January 5, 2019. The agency published the notice, “Future Format of the National Drug Code; Public Hearing; Request for Comments” in the August 7, 2018, Federal Register.

In the immediate future, the FDA will be holding a hearing on November 5, 2018, from 8:30 a.m. to 5 p.m. at the FDA White Oak Campus, 10903 New Hampshire Avenue, Building 31, Silver Spring, MD 20993. It will be broadcast live.

The hearing’s purpose is to obtain and discuss stakeholder feedback on the future format of the NDC number. The FDA is seeking feedback on the following topics:

  • The impact of transitioning from a 5-digit labeler code to a 6-digit labeler code, including the business, economic, information technology, and medical/clinical practice impacts, and its impact on the safety and security of drug products
  • Issues associated with the current lack of NDC uniformity in the marketplace
  • What should FDA consider as it explores any further changes or expansion to the format or length of the NDC
  • How to best transition to a new format for the NDC

The agency has focused questions for those who testify and provide comments, including:

  • How would you describe your business or area of focus (e.g., payer, hospital, healthcare practitioner, benefit manager or administrator, pharmacy, manufacturer, repackager, wholesale distributor, third-party logistics provider, drug compendia, standard setting organization, government entity)?
  • How do you or your members use the NDC?
  • What challenges do your organization or your members face with the current NDC and how do you overcome these challenges?
  • What changes, if any, would you or your members need to make to your systems to accommodate the 6-digit labeler code formats?

The move toward a different NDC format will impact nearly every system touching healthcare where medication use happens. The enormity of this activity during the next decade and beyond cannot be understated. It may take that time and longer to update and recode systems to manage to the new format. It could indeed be even bigger than the preparation for the Year 2000.

I encourage you to think through the implications for your organization and weigh in on the FDA hearing.

Marsha K. Millonig, MBA, BPharm, is president and CEO of Catalyst Enterprises, LLC, and an Associate Fellow at the University of Minnesota College of Pharmacy’s Center for Leading Healthcare Change.

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