FDA's Final NDC Rule Provides A 900-Year Supply Of Label Codes

By Kalie E. Richardson, Karla L. Palmer, and Dara Katcher Levy, Hyman, Phelps & McNamara

FDA has published its long awaited Final Rule Revising the National Drug Code Format and Drug Label Barcode Requirements, which will expand the dwindling supply of FDA labeler codes and corresponding NDCs to what FDA states is a 900-year supply.

As a reminder, NDCs are broken into three segments: labeler code, product code, and package code. The three-part structure of the NDC is not changing under the final rule and is identical to the format in the 2022 proposed rule. NDCs currently in use are 10 digits long and are configured as follows: 4-4-2; 5-3-2; 5-4-1.

Prior to this final rule, the current version of the regulations allows the FDA to begin assigning six-digit labeler codes once five-digit labeler codes have been exhausted, while still allowing variability in the length of product and package code segments, resulting in five potential NDC formats of 10 or 11 digits: 4-4-2; 5-3-2; 5-4-1; 6-3-2; and 6-4-1.

As raised by several commenters, the formatting variations have long been a recipe for confusion. For example, if an 11-digit NDC were transmitted without the hyphens, a 5-4-1, 6-3-2, and 6-4-1 NDC format would all be indistinguishable, which raises the risk of data loss and product mix-up. All stakeholders agree that a single format is preferable and the final rule eliminates the formatting variations as summarized in the table below:

	Current NDC format (digits)	New NDC format (digits)
Total	10 or 11	12
Labeler code	4-6	6
Product code	3-4	4
Package code	1-1	2

 

What Happens To Existing 10-Digit NDCs?

The final rule adopts without change FDA’s proposal that all existing NDCs will be converted to the 12-digit format by adding leading zeros to the labeler code, product code, and/or package code segments as needed to produce the 6-4-2 format. FDA intends to publish a database that will map each NDC appearing in the NDC Directory to the corresponding 12-digit NDC at least until the end of the transition period. FDA has clarified that conversion to the 12-digit NDC is not the assignment of a “new” NDC as FDA views this as purely a “ministerial, administrative change.” Importantly, this should address industry concerns that the move to a 12-digit NDC would trigger renegotiation of drug pricing and rebates. Relatedly, FDA will carry the burden of automatically updating all drug listing files to reflect the new NDC format.

When Does The New NDC Format Go Into Effect?

The proposed rule had a delayed effective date of five years following publication, plus an additional three-year transition period during which FDA would exercise enforcement discretion. Several commenters noted that a longer period was needed to update product labels and hardware/software systems and ensure interoperability of all changes. The final rule goes into effect in seven years instead of the original five, but the three-year transition period has not changed from the proposed rule. FDA declined to adopt phased implementation based on a manufacturer’s number of NDCs and also did not create a waiver process that would allow for an extension of the transition period. However, no enforcement action will be taken against an unexpired product labeled with the old NDC format after the transition period ends, so long as it was introduced into interstate commerce (i.e., grandfathered) prior to the effective date of the final rule, which is March 7, 2033. And although FDA has stated that drug products labeled with a 10-digit NDC that are introduced into interstate commerce after the effective date are subject to enforcement action, FDA, in effect, is providing enforcement discretion to allow firms to deplete labeling inventory after the effective date so long as outdated labeling is not utilized after the transition period.

In its justification of industry costs estimated, FDA states it is not including labeling disposal as part of costs because during the three-year transition period, “we do not intend to object to products being introduced into interstate commerce with the 10-digit NDC that they were previously assigned.”

Further, FDA intends to publish a database that will map each 10-digit NDC to the corresponding 12-digit NDC to minimize confusion and will also work with the National Institutes of Health (NIH) to help ensure that DailyMed (the drug listing database maintained by NIH) is updated and searchable for both 10-digit and 12-digit NDC formats.

In sum, as of March 7, 2033:

1. FDA will begin issuing the 12-digit NDCs;
2. existing NDCs automatically are converted to the 12-digit format;
3. product introduced into interstate commerce prior to the 2033 effective date is grandfathered; and
4. industry will experience a transition period from 2033 to 2036 for labeling updates.

What About FDA’s Barcode Label Requirement At 21 CFR § 201.25?

As industry knows well, there is currently considerable overlap between DSCSA’s product identifier requirement, which includes the NDC, and FDA’s barcode label regulation at 21 CFR § 201.25, which also requires inclusion of the NDC. FDA notes in the preamble to the final rule that, if § 201.25 requires a product label to include a barcode that encodes the NDC, the manufacturer or repackager would be able to encode the NDC into either a linear or nonlinear barcode. And, pursuant to the Drug Supply Chain Security Act (DSCSA), it must include a product identifier; “the 2D data matrix barcode could satisfy both sets of barcode requirements (§ 201.25 and DSCSA) because the 2D data matrix barcode includes encoding of the NDC.” Thus, there now is a much needed convergence of DSCSA and FDA’s barcode label requirement.

What About GTINs?

The DSCSA requires that each individual saleable unit of prescription drug be labeled with a product identifier in human-readable form and embedded in a machine-readable barcode. This is generally achieved via the Global Trade Identification Number (GTIN) issued by GS1. GTINs are used globally and are both embedded into scannable barcodes and printed on product labels. For pharmaceuticals, the FDA labeler code is incorporated into the GS1 Company Prefix and the full NDC is embedded into the GTIN (Frequently Asked Questions (FAQs) by the Pharmaceutical Industry in Preparing for the U.S. DSCSA, Section 2.1.4). However, this embedded GTIN configuration assumes a 10-digit NDC format, meaning that, as many commenters noted, the 12-digit NDC will no longer be consistent with the format of the GTIN. For manufacturers that market the same product in multiple countries, this change is extremely significant.

The final rule acknowledges that “The direct relationship between GS1’s GTIN-12 or -14 and the NDC will no longer exist once the new 12-digit NDC format is fully adopted because the use of 10- and 11-digit NDCs will be phased out and the GTIN-12 and GTIN-14 cannot accommodate the embedding of a 12-digit NDC.” To address this, GS1 U.S. has created an “application identifier” (AI 75) that will allow the NDC to continue to be embedded into barcodes. However, AI 75 cannot be embedded into UPC-A barcodes and the barcodes in which it can be incorporated can only be read by camera-based scanners — not traditional laser scanners.

While manufacturers and repackagers are responsible for updating their product labels, it is critical that all industry stakeholders (i.e., anyone who scans a barcode on a drug) are aware of the changes in the final rule and the corresponding infrastructure updates that may be required. This is not a simple proposition and the cost to industry to implement it will be significant.

Final Points

Although a change to the NDC format is necessary given the exhaustion of five-digit labeler codes, and the move to a consistent 12-digit NDC format should simplify many issues for industry, this transition, as stated above, will require significant preparation by industry and considerable resources.

At HDA’s Distribution and Management Conference and Expo in Austin, Texas, Ilisa Bernstein — former deputy director of FDA’s Office of Compliance and current president of Bernstein Rx Solutions, gave a timely and extremely informative presentation addressing the NDC final rule. Concerning the effects of the final rule on wholesalers, Bernstein added these important points:

• Mixed NDC formats are likely to occur during the multiyear transition.
• Systems must support both the 10- and 12-digit NDCs.
• The final rule impacts master data and transaction systems.
• The final rule potentially impacts chargebacks, rebates, and returns.
• A “crosswalk”/listing including both 10 and 12-digit NDCs may be needed during the transition period.
• This is not an inexpensive transition process.
• Start scoping project implementation now.

Bernstein's key takeaways from FDA’s final rule include the following:

• FDA is moving to a uniform 12-digit NDC format.
• Convergence of DSCSA and FDA’s barcode rule is happening.
• The change affects labeling, data systems, and supply chain processes.
• The final rule impacts every corner of the healthcare ecosystem.
• The final rule has a long implementation timeline, but there are significant operational implications.
• Early planning and system readiness are essential.

A version of this article was published first on Hyman, Phelps & McNamara P.C.’s FDA Law Blog. It is republished here with permission.

About The Authors:

Kalie E. Richardson is a director at Hyman, Phelps & McNamara. She focuses her practice on post-marketing regulatory compliance and enforcement, primarily for pharmaceutical manufacturers. Recently, she has participated in FDA inspections at facilities throughout the country, and prepared responses to Form FDA 483 inspectional observations, warning letters, and untitled letters issued to manufacturers, outsourcing facilities, and wholesale drug distributors. She regularly helps clients navigate post-inspection corrective actions and has a particular interest in data integrity remediation and internal compliance investigations.

Karla L. Palmer is a director focusing on DEA and FDA enforcement matters at Hyman, Phelps & McNamara. She has over 30 years of experience supporting the drug supply chain from manufacturing through distribution. She works on a range of issues, including regulations and guidance, inspections and investigations, and government proceedings.  Karla also regularly represents compounders and outsourcing facilities on FDA regulatory, enforcement, and state board matters throughout the country.

Dara Katcher Levy is a director at Hyman, Phelps & McNamara whose practice includes product communications, marketing, and import/export issues. She has assisted on products, including both orphan drugs and blockbuster pharmaceuticals, supporting successful launch campaigns, new marketing initiatives, and traditional healthcare professional and direct-to-consumer materials. Previously, she served on the regulatory staff at the FDA Center for Devices and Radiological Health. She received her law degree from the Fordham University School of Law.