Drug products are identified and reported using a unique, three-segment number, called the National Drug Code (NDC), which serves as a universal product identifier for drugs. This number identifies the labeler, product, and trade package size. The first segment, the labeler code, is assigned by the FDA. A labeler is any firm that manufactures (including repackers or relabelers), or distributes (under its own name) the drug. The second segment, the product code, identifies a specific strength, dosage form, and formulation of a drug for a particular firm. The third segment, the package code, identifies package sizes and types. The NDC will be in the following configuration: 5-4-2. FDA publishes the listed NDC numbers.
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What is an NDC?
NDC is short for National Drug Code. An NDC Code is a unique 10-digit, 3-segment numerical code assigned to medication in the United States listed under Section 510 of the U.S. Federal Food, Drug and Cosmetic Act.
How are NDCs Numbered?
The first segment of the NDC is the labeler code, which finds the company that manufactures and/or distributes the drug.
The second segment is the product code, which finds the specific strength, dosage, and formulation of a drug. Different formulations and/or strengths are assigned different product codes.
The third segment is the package code, which finds the package size and type. Different package codes differentiate between quantitative and qualitative attributes of the product packaging.
Why are NDC Codes so Important to Coders and Billers?
NDCs help ensure more correct payment and control of drug costs based on what has been administered and billed. NDCs also save significant time and effort when verified correctly.
What is an NDC↔CPT/HCPCS Cross-Reference?
While crosswalks are not intended to list out all the drugs and NDCs available in the United States, they do help explain which NDC-identified drugs are assigned to which HCPCS billing codes.
The NDC/HCPCS crosswalk file supplies a list of NDCs assigned to a Level II HCPCS. They also supply conversion factors to price the applicable billings and allow processing of claims filed using the NCPDP format.
How is it Calculated?
NDC pricing is based on three different pricing standards (outlined below).
- Average Wholesale Price (AWP) per unit
- AWP package price
- Wholesale Acquisition Cost (WAC) per unit/package
- Direct Unit Price
- Direct Package Price