To achieve these gains, the new policy makes an important change in the NDC numbering process. The coding system was created
in 1969 to facilitate automated processing of drug data by government agencies, hospitals, insurance companies, and drug manufacturers
and distributors. Accurate product codes now are essential for claims processing and a host of regulatory and information
functions, including providing proper reimbursement for pharmaceutical companies and pharmacy benefit managers by Medicare,
Medicaid, and private payers, Woodcock points out.
No more bulks?
To facilitate implementation of this electronic registration process, FDA proposes to assign the full NDC code for drug products,
instead of relying on manufacturers to submit code numbers to the agency. FDA now assigns only the labeler code, the first
segment of the 10-digit code, and manufacturers add their own product and package numbers. Unfortunately, companies make coding
errors, reuse NDC numbers from discontinued products, and often make changes to a drug without updating the code. These actions
result in all the errors in the listing system that drew the OIG's criticism.
The new arrangement will ensure that the codes are "unique and unambiguous," FDA states. The agency plans to assign new codes
prospectively to new products; manufacturers will be allowed to retain current numbers, provided they comply with the new
rules. The agency considered a proposal to completely reassign all existing NDC numbers, but decided not to because it would
cost almost $1 billion to implement and require major changes in data-processing systems used by manufacturers, pharmacy benefit
managers, and others.
Control over NDC numbers is key to improving drug registration and many information systems. To get an NDC code for a new
drug or dosage form, the manufacturer would have to provide all the required listing information: company name and contact
information, drug name, package size and type, drug master file number (for active ingredients), active and inactive ingredients,
dosage form, product imprints, and whether a drug is prescription or over-the-counter and for humans or animals. Requirements
differ somewhat for repackaged or relabeled products and for drugs made for private-label distribution.
While the new program promises more timely and accurate data, broader public disclosure could reveal some information that
manufacturers might prefer to keep confidential (e.g., plant locations, active ingredient amounts, excipients, and names of foreign company agents). FDA says that it may agree
to nondisclosure of some trade secret data, but that there are important reasons to permit access to most of the required
The agency explains, for example, that it must know the specific quantity of each active ingredient in order to ensure that
an NDC number fits different product strengths. Similarly, FDA wants data on a drug's dosage form to distinguish tablets from,
say, capsules. A box with 12 unit-of-use blisters would have a different code from each individual blister, a distinction
that could enhance the accuracy and value of bar codes and, thus, reduce medication errors. Patients with allergies must know
about excipients. And, information on tablet imprints would help FDA investigate reports of counterfeiting and adverse events.
It is likely to take several years to finalize the e-registration rule. In the meantime, FDA plans to start accepting electronic
listings on a voluntary basis once it gets the system up and running. After the rule is on the books, FDA will issue new implementing
guidance and e-filing policies.
The drug-registration rule would require companies that engage in the "manufacture, preparation, propagation, compounding,
or processing" of drugs to list all treatments produced "for commercial purposes." At the same time, the proposal specifically
exempts drugs produced for research, teaching, or testing purposes. And, registration is not required for pharmacies, hospitals,
and clinics that dispense drugs based on legal prescriptions and "do not manufacture, repackage, or relabel drugs for sale
other than in the regular course of the practice of pharmacy."