Drug Coding 101: What is an NDC – National Drug Code: Explained

Join RJ’s Product and Clinical teams as they walk through the multitude of different combinations of drug claims and pricing methodologies, via clips from the webinar “Shedding Light on Medically Covered Specialty Drug Pricing Methods.” In the following clip, Chris Webb explains the application and breakdown of the NDC or National Drug Code.

All past RJ webinars are viewable on-demand here: rjhealth.com/webinars.

National Drug Code: RJ Health Webinar Segment

Chris Webb: Okay, so let’s talk about NDCs. So, we have, you know, again, we’ve talked about the types of pricing: AWP – Average Wholesale Price, WAC – Wholesale Acquisition Cost, ASP – Average Sales Price. There’s another acronym NDC – National Drug Code. These are the individual products. Alright, so typically we’ll see an eleven-digit NDC appear. If you look at… If you go home and open up your medicine cabinet, you’ll find an NDC on everything from over the counter product to, you know, the latest and greatest anti-neoplastics (anti-cancer drugs), probably not in your medicine cabinet in that case, but… Each of these drug products will have their own eleven-digit code. They’re broken down into three segments. The manufacturer code, which is usually, again, tied to an individual manufacturer, the product code, which is an internal segmentation that they group different products between strength and dose, and then thirdly, the package code, which will be identifying different package sizes. We will see ten-digit NDC float through, typically it’ll be a zero will need to be added into those different segments, so if the manufacturer code only has four digits, so to say it was 1234, we add a leading zero to make that manufacturer code 01234. Same thing for the product code, you’d add the leading 0 to that segment. Package code, same thing. Add the leading zero. However, we take a look at all these NDCs, we get them from various sources, as well as manufacturers, and we’ll take a look at the drug component for that. From there we’ll link them to the appropriate HCPCS code and take a look at the pricing for the individual NDC. So NDC level pricing is a little different than code level pricing. Usually there are three different levels, we’ll have the pricing unit, the package size and package quantity. So here is an example for Procrit. So, we’ll ten thousand units per ML, and it’s a solution. The pricing will be done at those three levels for both AWP and Wholesale Acquisition. You get a Wholesale acquisition being created by the manufacturer. AWP adding a twenty percent mark up provided they don’t have a suggested AWP. In this case, the unit case, the unit price is based off of an ML, so there’ll be a rate for that: $308.66. The package size is a vial, so there are two MLs in that vial. So, we’ll multiply that unit price by two to come up with a price per vial: $617.32. We also have a package quantity. So, there is basically a packaging where each individual vial comes in a packaging of four. So again, you have a multiplier of four in this case. So, this NDC, that’s NDC level pricing, actually yields three unique prices, one at the ML, one at the package size and then one at the package quantity being four vials. We kind of made it show as a pyramid on the right-hand side again, small, medium, large. However, for something like Remicade which is an S O L R, a reconstituted solution, all the pricing are the same. So, the pricing unit is based off of an EA or Each, the batch size is a vial; package quantity is that same vial. So, the price in that case is all the same. But again, if you are looking at NDC level pricing you have to make sure that you’re looking at the pricing unit, the package size or package quantity level.

 

To watch this full webinar: “Shedding Light on Medically Covered Drug Pricing Methods,” click here.

Learn why different pricing methods exist, how they are different, when each is used, and how they impact reimbursement. We also cover how NDCs are linked and crosswalked to HCPCS codes.

Hosted by:

Christopher Webb, CPhT
Director, Product Development


Jason Young, PharmD
SVP, Clinical Data Operations


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