The NDC Shortage: What the FDA Could (and Should) Do to Address It

Today’s guest post comes from Patricia Milazzo, Senior Director, Embedded Content with Clinical Effectiveness at Wolters Kluwer, Health.

As Patty explains, the U.S. Food & Drug Administration (FDA) will run out of 5-digit National Drug Code (NDC) codes within the next ten to fifteen years. She describes how the FDA can minimize the negative effects of the inevitable change in NDC format.

To learn more about the debates and best practice recommendations, download the complete paper, The NDC Shortage: What the FDA Could (and Should) Do to Address It.

Read on for Patty’s insights.

The NDC Shortage: What the FDA Could (and Should) Do to Address It
By Patricia Milazzo, RPh, BA, Senior Director, Embedded Content with Clinical Effectiveness at Wolters Kluwer, Health

Nearly two decades ago in response to fears over the Year 2000 (Y2K) software problem, people were bracing for the day we shifted to programming our computers from marking the year with two digits to four.

The healthcare industry in the U.S. is now facing its own “Y2K for pharmacy,” as the U.S. Food & Drug Administration (FDA) finds itself staring down the barrel of an eventual National Drug Code (NDC) shortage.

The NDC is the premier identifier distributed by the FDA and used in healthcare to identify a specific drug product. It is divided into three segments that identify:

• Labeler (manufacturer, repackager, or distributor)
• Product (strength, dosage form, and drug formulation)
• Commercial package size

The NDC is a 10-digit number, and its three segments can be broken into one of the following configurations: 5-3-2 or 5-4-1.

The problem now facing U.S. healthcare is that, due to an explosion of new labelers entering the market, the FDA is running out of 5-digit labeler codes. The 5-digit format provides 90,000 potential combinations, and although that seems like a lot, the FDA anticipates running out of labeler codes within the next 10-15 years. Like Y2K, the disruption and impact to the healthcare industry will be widespread and of a large magnitude, and will require retooling of major industry systems.

THE PUBLIC DEBATE

At a public hearing on November 5, 2018, the FDA solicited opinions from stakeholders throughout the healthcare industry on possible fixes for the pending NDC shortage. The FDA proposed the following four options for consideration:

• Option A: Continue 5-digit labeler codes until exhaustion, then move to a 6-digit format
• Option B: Same as A, but move to a 6-digit format on a designated date before the 5-digit format is exhausted
• Option C: Convert current 10-digit NDCs to an 11-digit format, then to a 12-digit format, once 5-digit labeler codes are exhausted
• Option D: Move toward a 12-digit NDC on a designated date before the current pool of 5-digit labeler codes is exhausted

FORMATTING AND THE FLAWS OF FLEXIBILITY

Changing the NDC format represents a major upheaval to healthcare providers and businesses:

• There are significant costs associated with upgrading current information systems and adopting new standards
• It involves almost all segments within the healthcare industry – although retail pharmacies, PBMs, and wholesalers are primed to take the biggest hit
• The industry needs sufficient lead-time to ensure smooth transition to the new format
• The change poses grave risk to patient safety from conflicting drug information if the transition process experiences problems

Currently, the NDC stands at 10 digits that can be configured in at least two patterns. However, that flexibility of format conflicts with the Health Insurance Portability and Accountability Act (HIPAA) standard, which calls for an 11-digit NDC. To meet HIPAA standards, many data vendors and systems have been adding a leading zero to the appropriate code segment. But this can often cause confusion, since zero is a valid digit in the creation of NDCs regularly.

BEYOND THE FDA PROPOSALS

Many in the industry believe the FDA needs to incorporate timing and notification steps into its NDC transition plan. For example:

• As recommended by NCPDP, establish a fixed transition timeline that includes close coordination with the affected players throughout the process
• Once an option is selected, create an implementation timeline that provides at least 10 years to transition – so yes, that means we would need to have a decision by the end of 2019 to be completed by 2030!
• FDA should provide advanced notice to the industry when only 10,000 5-digit labeler codes remain

There will be more rounds of discussion, feedback, and modification before the FDA announces its final decision on how to manage the NDC shortage. Once the FDA has a plan in place, we will need to work together to modify our systems, test our data, and ensure we are doing all we can to keep patients safe.

In the meantime, make your voice heard. The FDA is welcoming feedback on the future format of the NDC through January 5, 2019.

To learn more about which FDA option was favored at the hearing, debates that have cropped up, and best practice recommendations, download the complete paper, The NDC Shortage: What the FDA Could (and Should) Do to Address It.

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