NDC 101: A guide to the coding system

The National Drug Code (NDC) is used by the federal government to identify and track drugs intended for human use. Here’s a look at what you need to know.
HEDIS 101

Table of Contents

What is the NDC? 

The National Drug Code (NDC) is the US Food and Drug Administration’s (FDA’s) standard for identifying medications marketed in the United States. Every drug receives a unique 10- or 11-digit numerical code, which is separated by dashes into three sets of numbers. The first segment identifies the drug labeler, which could be the manufacturer, repackager, or distributor. The second segment – the product code – indicates the drug’s strength and dosage form, as well as its formulation. The third set of numbers is the package code, which is used to identify the package size and type. 

For example, a 200mg tablet of ibuprofen has an NDC code of 42681-0026-1.

How and by whom are NDC codes used? 

The primary purpose of the NDC is to provide transparency into finished drugs regardless of where they are in the healthcare supply chain. This is accomplished through the National Drug Code Directory, an online and searchable database maintained by the FDA and updated daily. 

From the drug manufacturer’s perspective, NDCs come into play either when they issue a new drug or when they issue the same medication in a different dosage or new package size. When multiple manufacturers produce the same medication, they each assign different NDCs to their products. 

National Drug Codes are also used for billing purposes. For example, the Centers for Medicare & Medicaid Services (CMS), mandates that providers include NDCs when submitting claims for covered drugs, and many state and private payers require the same. 

How do NDC codes impact EHR workflows? 

EHRs typically make it easy to add NDCs to a patient’s medical record, either by typing it in with a keyboard or through barcode scanning. From there, the codes can be used for billing purposes, but they can also play an important role in reducing potential medication errors. If a patient is allergic to a certain medication, for example, an alert might be triggered based on the data associated with an entered NDC code. 

Is NDC data interoperable? 

Interoperability has to do with the ability of multiple computer systems to connect and communicate with each other. The National Drug Code helps make interoperability possible by standardizing how medications are identified. No matter which electronic systems organizations choose to use, they should be able to recognize a 10- or 11-digit code just like any other system would. 

Where is NDC data collected and stored beyond the EHR? 

Beyond the electronic health record, NDC data is collected by the FDA and stored in its NDC Directory. It’s also gathered by payers – like CMS, state agencies, and private insurance companies. State Medicaid agencies, for example, will often use NDC data to secure rebates from drug manufacturers that have entered rebate agreements with CMS. 

Are there any challenges with the NDC? 

One challenge with the NDC is that the numbers listed on drug packages are typically in 10-digit “5-3-2” format, while payers require an 11-digit “5-4-2” format for claims processing. To get around this issue, providers must insert a zero when referring to medications identified with 10-digit codes, and they must put the zero in exactly the right spot to avoid confusion that could delay reimbursement. 

The other major problem with the NDC is more mathematical in nature. Because there are so many medications at different dosages and in different packages, the FDA is running out of codes. In July 2022, the agency proposed moving to a 12-digit format for NDCs that would exponentially increase the possible numerical combinations for codes. That proposal is still under consideration, and any change—should it be approved—would be years away. 

Learn about the challenges of cross-mapping medication and laboratory data in our white paper, Labs, meds, and data quality: Taming complexity through normalization.

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