Market Analysis and Price Projections for the Drug NDC: 46122-0573
Understanding the National Drug Code (NDC)
To analyze the market and project prices for a drug identified by the NDC 46122-0573, it is crucial to understand what the NDC represents. The National Drug Code (NDC) is a unique, three-segment number that identifies a drug product. It includes the labeler code, product code, and package code, each segment providing specific information about the drug[5].
Breaking Down the NDC 46122-0573
- Labeler Code: The first segment (46122) identifies the firm that manufactures, repacks, or distributes the drug.
- Product Code: The second segment (0573) identifies the specific strength, dosage form, and formulation of the drug.
- Package Code: The third segment identifies the package size and type.
Market Context
Pharmaceutical Industry Outlook
The pharmaceutical industry, particularly the generic drug sector, is expected to experience mid-single-digit percent annual price erosion in 2024. However, there is also a projection of modest revenue growth, which is an improvement from recent trends. Biosimilars are anticipated to see substantial revenue growth, although intense competition may limit profitability[3].
Price Stability and Fluctuations
Historical data indicates that drug prices tend to be relatively stable, with minimal fluctuations. For instance, an analysis of Medicare drug card sponsors’ pricing files from 2004 showed that only about 1 percent of drug prices changed in most weeks, and 73 percent of the prices changed two times or less over a six-month period[4].
Regulatory and Compliance Aspects
Pharmacy benefit managers must adhere to strict guidelines when using NDCs. Drugs must be listed as "A" or "B" rated in the FDA's Approved Drug Products with Therapeutic Equivalence Evaluations (the Orange Book) or have a similar rating by a nationally recognized reference. Additionally, the drugs must be available for purchase from national or regional wholesalers and not be considered obsolete or on a drug shortage list[2].
Price Projections for NDC 46122-0573
Given the generic nature of the pharmaceutical industry and the expected trends:
Price Erosion
- The drug identified by NDC 46122-0573, if it is a generic drug, is likely to experience mid-single-digit percent annual price erosion. This means that the price could decrease by around 3-5% annually.
Revenue Growth
- Despite price erosion, the overall revenue for the drug could still see modest growth due to increased volume sales or market expansion.
Competition and Profitability
- If the drug is part of a highly competitive market, such as biosimilars, the profitability might be limited despite revenue growth due to intense competition.
Example Scenario
Assuming the drug is a generic medication with a current market price of $100 per unit:
- Price Erosion: A 4% annual price erosion would reduce the price to $96 per unit in the first year and $92.16 per unit in the second year.
- Revenue Growth: If the sales volume increases by 5% annually, the revenue could still grow despite the price decrease. For example, if 100,000 units were sold in the first year, the revenue would be $9,600,000. With a 5% increase in volume, the revenue in the second year could be $9,830,400 despite the lower price.
Risks and Challenges
Regulatory Risks
- Changes in FDA inspections or regulations, especially for foreign manufacturing facilities, could impact the availability and pricing of the drug[3].
Litigation Risks
- Price-fixing litigation can also affect the pricing and profitability of the drug, as it could lead to legal costs and potential fines.
Market Dynamics
- The drug's market position and competition level will significantly influence its price and revenue projections. A highly competitive market may lead to more aggressive pricing strategies.
Key Takeaways
- NDC Understanding: The NDC is crucial for identifying and tracking drug products.
- Price Trends: Generic drugs are expected to see mid-single-digit percent annual price erosion but modest revenue growth.
- Regulatory Compliance: Adherence to FDA ratings and availability criteria is essential.
- Market Dynamics: Competition and regulatory risks can significantly impact price and revenue projections.
FAQs
What is the National Drug Code (NDC)?
The National Drug Code (NDC) is a unique, three-segment number that identifies a drug product, including the labeler, product, and package codes.
How does the pharmaceutical industry outlook affect drug prices?
The industry outlook suggests mid-single-digit percent annual price erosion for generic drugs but modest revenue growth due to increased sales volumes.
What are the regulatory requirements for using NDCs?
Drugs must be listed as "A" or "B" rated in the FDA's Orange Book, be available for purchase from national or regional wholesalers, and not be considered obsolete or on a drug shortage list.
How does competition impact drug pricing?
Intense competition, especially in the biosimilars market, can limit profitability despite revenue growth.
What are the potential risks for drug pricing in 2024?
Potential risks include price-fixing litigation, increased FDA inspections of foreign manufacturing facilities, and market dynamics such as competition and regulatory changes.
Sources
- Drug Name and National Drug Code (NDC) Reference Data Instructions - CMS
- Laws - Louisiana State Legislature
- Pharmaceutical Industry 2024 Credit Outlook Is Stable As Revenue Growth Mitigates Pressures - S&P Global
- Temporary Medicare-Approved Drug Discount Card: An Analysis of Drug Prices - OIG
- National Drug Code Database Background Information - FDA
