Market Analysis and Price Projections for the Drug NDC: 00904-6731
Understanding the NDC Code
The National Drug Code (NDC) 00904-6731 is a unique 11-digit, 3-segment code assigned to a specific medication under Section 510 of the U.S. Federal Food, Drug, and Cosmetic Act. Here’s a breakdown of the NDC code:
- Labeler Code: The first segment (00904) identifies the labeler or vendor, which is the company that manufactures, repacks, or distributes the drug.
- Product Code: The second segment (673) identifies the specific strength, dosage form, and formulation of the drug for the particular firm.
- Package Code: The third segment (1) identifies the package size and type of the product[1][5].
Market Context
To analyze the market and project prices for the drug with NDC 00904-6731, it is crucial to understand the broader pharmaceutical market trends and regulatory frameworks.
Pharmaceutical Industry Outlook
The pharmaceutical industry is expected to experience a mix of challenges and opportunities in 2024. For generic drugs, there is an expectation of mid-single-digit percent annual price erosion, but also a return to modest revenue growth. Biosimilars are anticipated to see substantial revenue growth, although intense competition may limit profitability[3].
Regulatory Frameworks
Regulatory changes, such as those introduced by the Inflation Reduction Act, are significantly impacting drug pricing. For instance, the Medicare Drug Price Negotiation Program will start applying negotiated prices, known as Maximum Fair Prices (MFPs), to certain drugs beginning in 2026. These prices are negotiated between the Centers for Medicare and Medicaid Services (CMS) and drug companies to reduce costs for Medicare beneficiaries[2].
Pricing Mechanisms
340B Ceiling Price
For drugs covered under the 340B program, 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 price is then adjusted by the package size and case pack size to ensure it reflects the actual market price[1].
Medicaid Drug Rebate Program (MDRP)
Under the MDRP, manufacturers must report new NDCs promptly to ensure coverage by state Medicaid programs. The program also involves calculating the best price and rebate amounts, which can affect the overall pricing strategy for drugs[4].
Price Projections
Impact of Negotiated Prices
If the drug with NDC 00904-6731 is selected for the Medicare Drug Price Negotiation Program, its price could be significantly reduced. For example, drugs like Januvia and Fiasp, which are used for diabetes, saw negotiated prices that were 79% and 76% lower than their 2023 list prices, respectively[2].
Generic and Biosimilar Trends
If the drug is a generic or biosimilar, it may face mid-single-digit percent annual price erosion due to market competition. However, biosimilars are expected to see substantial revenue growth despite this erosion[3].
Case Study: Similar Drugs
To project the price of the drug with NDC 00904-6731, let's consider similar drugs that have undergone price negotiations or are subject to similar market trends.
- Januvia (Sitagliptin): The negotiated price for Januvia was reduced to $113.00 per 30-day supply from $527.00, a 79% reduction. If a similar reduction were applied to the drug in question, it could result in significant savings[2].
Key Factors Influencing Price
Regulatory Changes
Changes in regulatory policies, such as the Inflation Reduction Act, can significantly impact drug prices. The act introduces caps on out-of-pocket drug costs for Medicare beneficiaries and mandates negotiated prices for certain drugs[2].
Market Competition
The level of competition in the market, especially from generics and biosimilars, can drive down prices. However, intense competition may also limit profitability for manufacturers[3].
Reporting and Compliance
Prompt reporting of new NDCs and compliance with Medicaid and 340B programs can affect how quickly drugs are covered and priced in the market[4].
Illustrative Statistics
- Medicare Savings: The Medicare Drug Price Negotiation Program is estimated to save $6 billion in net covered prescription drug costs if the negotiated prices had been in effect during 2023. This represents a 22% reduction in net spending[2].
- Generic Price Erosion: Generic drugs are expected to experience mid-single-digit percent annual price erosion, which could impact the pricing of the drug in question if it falls into this category[3].
Conclusion
The price projection for the drug with NDC 00904-6731 depends on several factors, including its classification, market competition, and regulatory changes. Here are some key takeaways:
Key Takeaways
- Regulatory Impact: Negotiated prices under programs like the Medicare Drug Price Negotiation Program can significantly reduce drug costs.
- Market Trends: Generic and biosimilar drugs face price erosion, but biosimilars may see substantial revenue growth.
- Compliance: Prompt reporting of NDCs and compliance with Medicaid and 340B programs are crucial for market pricing.
- Competitive Landscape: Intense competition can drive down prices but may limit profitability.
FAQs
Q: What is the National Drug Code (NDC) and how is it structured?
The NDC is a unique 11-digit, 3-segment code that identifies the labeler, product, and trade package size of a medication. The first segment is the labeler code, the second is the product code, and the third is the package code[1][5].
Q: How are prices calculated under the 340B program?
Prices under the 340B program are calculated by subtracting the Unit Rebate Amount (URA) from the Average Manufacturer Price (AMP) for the smallest unit of measure, then adjusting for package size and case pack size[1].
Q: What is the impact of the Medicare Drug Price Negotiation Program on drug prices?
The program negotiates Maximum Fair Prices (MFPs) with drug companies, which can result in significant price reductions. For example, some drugs saw price reductions of up to 79% compared to their list prices[2].
Q: How does market competition affect generic and biosimilar drug prices?
Market competition, especially from generics and biosimilars, can lead to mid-single-digit percent annual price erosion. However, biosimilars are expected to see substantial revenue growth despite this erosion[3].
Q: Why is prompt reporting of new NDCs important?
Prompt reporting ensures that new drugs are covered by state Medicaid programs quickly, which can expedite patient access and ensure compliance with laws and regulations[4].
Sources
- HRSA: NDC Product Details - Log into 340B OPAIS - HRSA.
- CMS: Medicare Drug Price Negotiation Program - CMS.
- S&P Global: Pharmaceutical Industry 2024 Credit Outlook Is Stable As Revenue Growth Mitigates Pressures.
- Medicaid: Manufacturer Release 118 - Medicaid.
- AAPC: NDC Code Lookup - CPT/HCPCS Cross-Reference.
