Introduction to the National Drug Code (NDC)
The National Drug Code (NDC) is a critical identifier in the pharmaceutical industry, used to track and manage drug products from manufacture to point of sale. It is a 10-digit, three-segment number that identifies the labeler, product, and package size of a drug[5].
Components of the NDC
- Labeler Code: Assigned by the FDA, this segment identifies the firm that manufactures, repacks, or distributes the drug.
- Product Code: Assigned by the firm, this segment identifies the specific strength, dosage form, and formulation of the drug.
- Package Code: Also assigned by the firm, this segment identifies the package size and type[5].
NDC Formats
NDCs can be found in three different formats: 4-4-2, 5-3-2, and 5-4-1. The format depends on the length of the labeler code and the choices made by the firm regarding the product and package codes[1].
Market Analysis and Price Projections
Drug Price Inflation
The pharmaceutical market, particularly the segment involving specialty pharmaceuticals, is experiencing significant price inflation. According to Vizient, Inc., drug price inflation is projected to grow at 3.8% in 2024, driven largely by specialty pharmacy products, including weight loss drugs and gene therapies[2].
Specialty Pharmaceuticals
Specialty pharmaceuticals, which treat high-cost, complex, or chronic conditions such as cancer, infectious diseases, autoimmune diseases, and pulmonary conditions, make up a substantial portion of the top spend medications. With 42 novel specialty drugs approved in 2023 and more expected in 2024, the price increase for these medications is projected to be around 4.18%[2].
Biosimilars and Market Share
Biosimilars, which are biologic products that are highly similar to and have no clinically meaningful differences from an FDA-approved reference product, are expected to grow in market share. While they currently represent a smaller portion of the market, biosimilars are anticipated to increase their presence, particularly as pharmacy benefit managers finalize their formulary strategies[2].
Example: NDC 00536-1161
To analyze the market and price projections for a specific NDC, such as 00536-1161, one would need to break down the components of the NDC:
- Labeler Code: The first segment (00536) identifies the labeler.
- Product Code: The second segment identifies the specific drug product.
- Package Code: The third segment identifies the package size and type.
Price Increase Methodology
When analyzing price increases, methodologies such as those outlined by the Washington State Health Care Authority can be used. This involves calculating the price increase over a 12-month period or a cumulative increase over three years. For example, if the price of a drug with a specific NDC increases by 15% or more in a 12-month period, it may trigger a review for affordability[4].
Regulatory and Market Trends
The biopharma and biotech industries are evolving rapidly due to advancements in technology, changing regulatory frameworks, and a shift towards patient-centered care. These trends are expected to continue in 2025, with predictions including accelerated clinical trial designs, evolving regulatory landscapes, and a rise in precision medicine and AI/ML technologies[3].
Impact of NDC on Drug Distribution and Supply Chain
NDCs play a crucial role in ensuring the accurate tracking and distribution of drugs. They are used extensively in clinics, hospitals, and pharmacies for ordering, inventory management, and medical billing. Automated systems often rely on NDCs to check inventory and restock drugs, ensuring supply chain security and the accurate tracking of drugs from the manufacturer to the point of sale[1].
Future of NDC Formats
The FDA is currently considering changes to the NDC format, potentially moving to a 12-digit format in the future. This change is aimed at improving the efficiency and accuracy of drug identification and tracking[1].
Key Takeaways
- NDC Importance: The NDC is a vital identifier for drug products, ensuring accurate tracking and management throughout the supply chain.
- Price Inflation: Specialty pharmaceuticals are driving significant price inflation, with projected increases of 4.18% in 2024.
- Biosimilars: Biosimilars are expected to gain market share, potentially affecting the pricing dynamics of biologic drugs.
- Regulatory Trends: The biopharma and biotech industries are evolving, with a focus on precision medicine, AI/ML technologies, and patient-centered care.
- Future NDC Formats: The FDA is considering changes to the NDC format to enhance efficiency and accuracy.
FAQs
What is the National Drug Code (NDC)?
The National Drug Code (NDC) is a unique, 10-digit number that identifies a drug product, including the labeler, product, and package size.
How are NDCs used in the pharmaceutical industry?
NDCs are used for ordering, inventory management, medical billing, and ensuring supply chain security. They are also required for accurate reimbursement by insurance and government programs.
What are the different formats of NDCs?
NDCs can be found in three formats: 4-4-2, 5-3-2, and 5-4-1, depending on the labeler code and the choices made by the firm.
How do biosimilars affect the market for biologic drugs?
Biosimilars are expected to increase their market share, potentially reducing the prices of biologic drugs as they become more widely accepted and mandated by payers.
What are the projected price increases for specialty pharmaceuticals in 2024?
Specialty pharmaceuticals are projected to see a price increase of 4.18% in 2024, driven by factors such as the increasing utilization of weight loss drugs and the expansion of gene therapies.
Sources
- FDA Drug Topics Webinar: National Drug Code (NDC) for Healthcare Providers.
- Vizient, Inc.: Vizient Projects 3.8% Drug Price Increase Driven by Specialty Pharmaceuticals.
- TFS CRO: 5 Predictions for the Biopharma and Biotech Industries in 2025.
- Washington State Health Care Authority: Methodology for Identifying Drugs for Affordability Review.
- FDA: National Drug Code Database Background Information.
