Understanding the National Drug Code (NDC)
The National Drug Code (NDC) is a unique 11-digit number assigned to each medication, including the one identified by the NDC 00187-0797. This code is crucial for tracking, pricing, and managing pharmaceutical products across the supply chain[1][2][5].
Market Context of Pharmaceutical Pricing
Global and U.S. Pricing Trends
Pharmaceutical prices in the U.S. are significantly higher compared to other regions. According to the ASPE analysis, by 2022, prices in the U.S. were 5.5 times those in the OECD (excluding the U.S.) and 7.7 times prices in the rest of the world (excluding the U.S.). This disparity is partly due to the drug mix in the U.S., which tends to include more expensive compounds[4].
Revenue Growth and Price Erosion
The pharmaceutical industry, particularly the generic drug sector, is expected to see modest revenue growth in 2024, despite mid-single-digit percent annual price erosion. Biosimilars are also anticipated to contribute substantially to revenue growth, although intense competition may impact profitability[3].
Pricing Mechanisms for NDC 00187-0797
Ceiling Price Calculation
For drugs participating in the Medicaid Drug Rebate Program (MDRP), the ceiling price is calculated by subtracting the Unit Rebate Amount (URA) from the Average Manufacturer Price (AMP) for the smallest unit of measure. This calculation is then adjusted by the package size and case pack size to determine the final ceiling price[2].
Example Calculation
- Average Manufacturer Price (AMP): The average price at which the manufacturer sells the drug to wholesalers, retailers, and other entities.
- Unit Rebate Amount (URA): The rebate amount per unit that the manufacturer must pay to the state Medicaid programs.
- Ceiling Price: Calculated as (AMP - URA) x Package Size x Case Pack Size.
For NDC 00187-0797, if the AMP is $10 per unit, the URA is $2 per unit, the package size is 100 units, and the case pack size is 10 packages, the ceiling price would be:
[ \text{Ceiling Price} = (10 - 2) \times 100 \times 10 = \$80,000 ]
Impact of NDC Changes
The FDA's potential changes to the NDC format, such as transitioning from a 5-digit to a 6-digit labeler code, could significantly impact pricing and inventory management systems. This change would require extensive updates to nearly every system involved in the pharmaceutical supply chain, affecting business operations, IT systems, and medical practices[1].
Price Projections for NDC 00187-0797
Short-Term Projections
Given the current market trends, it is likely that the price of the drug identified by NDC 00187-0797 will experience some erosion due to the expected mid-single-digit percent annual price decline in the generic drug industry. However, this erosion might be mitigated by the overall revenue growth anticipated in the pharmaceutical sector[3].
Long-Term Projections
In the long term, several factors will influence the price of this drug:
- Competition: Increased competition from biosimilars and other generic drugs could drive prices down.
- Regulatory Changes: Any changes to the NDC format or regulatory requirements could impact pricing and availability.
- Global Pricing Trends: The significant price disparity between the U.S. and other regions may lead to policy changes or market adjustments that could affect pricing.
Potential Risks
- Price-Fixing Litigation: Ongoing litigation related to price-fixing in the generic drug industry could lead to price volatility.
- FDA Inspections: Increased FDA inspections of foreign manufacturing facilities may affect supply chains and pricing[3].
Key Takeaways
- The NDC 00187-0797 is part of a broader pharmaceutical market characterized by high prices in the U.S. compared to other regions.
- Pricing mechanisms such as the Medicaid Drug Rebate Program play a crucial role in determining the ceiling price for covered outpatient drugs.
- Market trends indicate modest revenue growth but also price erosion, particularly in the generic drug sector.
- Regulatory changes, including potential updates to the NDC format, could significantly impact the pharmaceutical supply chain and pricing.
FAQs
What is the National Drug Code (NDC)?
The National Drug Code (NDC) is a unique 11-digit number assigned to each medication, used for tracking, pricing, and managing pharmaceutical products.
How is the ceiling price calculated for Medicaid-covered drugs?
The ceiling price is calculated by subtracting the Unit Rebate Amount (URA) from the Average Manufacturer Price (AMP) for the smallest unit of measure, then adjusted by the package size and case pack size.
What are the potential impacts of changing the NDC format?
Changing the NDC format could significantly impact nearly every system involved in the pharmaceutical supply chain, affecting business operations, IT systems, and medical practices.
Why are pharmaceutical prices in the U.S. higher than in other regions?
Pharmaceutical prices in the U.S. are higher due to a combination of factors, including a drug mix that skews towards more expensive compounds and different regulatory environments.
What are the potential risks affecting the price of NDC 00187-0797?
Potential risks include price-fixing litigation, increased FDA inspections of foreign manufacturing facilities, and competition from biosimilars and other generic drugs.
Sources
- Wolters Kluwer: "Are You Prepared for a Major Industry Change to the National Drug Code (NDC) Number?"
- HRSA: "NDC Product Details - Log into 340B OPAIS"
- S&P Global: "Pharmaceutical Industry 2024 Credit Outlook Is Stable As Revenue Growth Mitigates Pressures"
- ASPE: "International Market Size and Prices"
- CMS: "Drug Name and National Drug Code (NDC) Reference Data Instructions"
