This proposed rule, if finalized, would amend regulations governing the format of the National Drug Code (NDC) by standardizing the format of NDCs to be 12 digits in length. Currently FDA-assigned NDCs are 10-digits and can be in multiple formats. The NDC for each listed drug in the United States is a unique 3-segment number, where the 3 segments are the labeler code, product code, and package code. The proposed standardized NDC would consist of three segments: a 6-digit labeler code, a 4-digit product code, and a 2-digit package code. If the proposed rule is finalized, FDA-assigned 10-digit NDCs would need to be updated to convert to the uniform 12-digit format by adding leading zeros to the respective segments.
We expect the proposed standardized format would facilitate the adoption of a single NDC format by all stakeholders. This standard would eliminate the need and cost to convert FDA-assigned NDCs to a different format used by other sectors of the healthcare industry. Standardization and adoption of a single format would eliminate the need for additional quality control and validation by certain stakeholders, such as payors and prescribers, to ensure a drug product and its respective NDC are accurate; this step is particularly important for insurance coverage and reimbursement claims. Another potential benefit of the rule would be to avoid any potential risks to the public health from potential reductions in medication errors and risk of confusion. We do not have data to quantify these potential benefits and request comments.
The costs to industry of converting current NDC codes to the proposed format would include one-time costs of updating software systems, new training for employees, coordinating labeling updates, and reading and understanding the rule. We estimate annualized costs would be about $12.4 million ranging from $6.1 million to $19.4 million using a 7-percent discount rate over a ten-year horizon. Similarly, we estimate annualized costs would be about $10.2 million ranging from $5.1 million to $16.0 million using a 3-percent discount rate over a ten-year horizon. The present-value of the estimated costs would be $87.1 million ranging from $43.1 million to $136.3 million at both the 7- and 3-percent discount rates.
Regulatory Impact Analysis
Federal Register: 87 FR 44038, July 25, 2022