From 10 Digits to 12: Inside the FDA's New NDC Format

[00:00:00] The current format of 10 Digits is running out of labeler code combinations. And based on what I just told you about the importance of the NDC, that can happen. So as more drug products are introduced in the United States and more companies need identifiers for products, FDA needs a format that can support the healthcare system in the long term. Hello and welcome to the Next Level Supply Chain with GS1 US,

[00:00:27] a podcast in which we explore the mind bending world of global supply chains, covering topics such as automation, innovation, unique identity and more. I'm your co-host Reed. And I'm Liz. And welcome to the show. Hello and thank you for joining us. Today we're going to be talking about an update that's coming from the FDA and it's related to the National Drug Code. Currently the National Drug Code is a 10 digit code

[00:00:54] and in 2033, it's going to be moving to 12 digits. Our guest today is Ulrich Majewski. He is on our healthcare team here at GS1 US. He's a customer success director. He comes from the healthcare industry. He's got a lot of experience and he really walks us through what the National Drug Code is, why it's important, the hurdles and challenges that industry is going to face with the traditional update.

[00:01:23] We're going from 10 digits to 12 digits. The why, the benefits. This was a very enlightening conversation for me. I didn't realize all that was involved. I thought it was more of a healthcare, pharmaceutical, medical situation. You can get over the counter medications at gas stations. It's going to impact them as well. So this is why there's a timeframe between now and 2033 to get it done.

[00:01:50] And Ulrich walks us through everything. Let's jump right into the conversation. Hey, Ulrich. Welcome to the show. Hey, good afternoon. Thanks for having me. Excited to be here. Yeah, yeah. We're glad you could carve out some of the time. Before we jump into the questions, if you could for our audience, just give us a little background on yourself and the work you're leading at GS1 US. So I'm the customer success director for healthcare here at GS1 US.

[00:02:16] I work primarily in the pharmaceutical space supporting the healthcare industry, but we also do work across in the medical space as well. One of the things I do in my role is to help businesses leverage our standards at GS1 to meet business and regulatory challenges, right? So if there's a regulation and our standards need to be used to help companies meet that regulation, right? I help organizations be able to do that.

[00:02:44] So I also facilitate the working groups that we have in pharmaceutical, where we bring together in a neutral format members of the supply chain that talk about how the best practice to apply our standards to meet these challenges and basically publish guidances and resources that's available for broader industry so that they can leverage the same standards to meet those requirements.

[00:03:11] And so, in fact, one of the things we'll talk about today is GS1, we just kicked off our new national drug code format working group to address some of the challenges that this new rule that just passed has presented to industry. That's a great transition, Liz. Great transition. And I know in the past on our podcast, we've talked about all of the nuances in the medical space, and this is just one of them that kind of is mind blowing and we're really looking forward to diving in.

[00:03:40] And for those listeners who may not be familiar with it, tell us what the National Drug Code or people call it NDC and it just flows off, right? Tell us what NDC is and why it's such a critical identifier through the healthcare system. Yeah, no, that's the $64,000 question, right? So, the NDC is essentially the identifier that the Food and Drug Administration uses for drug products marketed in the United States.

[00:04:06] It's a numeric code, has three segments to identify the labeler, the product, and the package size or type. And so, in practical terms, it helps healthcare organizations consistently identify what drug is this, right? In our business, in healthcare, this is one of the most critical master data elements all across the supply chain.

[00:04:32] From manufacturers to distributors, pharmacies, providers, dispensers, payers, data systems, folks that handle reimbursements and billing for organizations. The NDC is a critical master data element that plays a role in all of those processes. You know, it's funny, people know GS1, of course, as a standards organization, right? And that's what we, of course, are. But the NDC, if you think about it, is really a standard, right?

[00:04:59] It's the government standard, but it's the government's identification standard for drugs. And it's a required element for product that's transacted in our supply chain. When you're asking about criticality, I think that was one of the things that you wanted to know about. It shows up because the NDC shows up in so many different places, right? Product listing, ordering, inventory management, reimbursements, recalls, master data.

[00:05:26] And so, when that identifier, the NDC is accurate and consistently represented, right? It supports optimal communication between trading partners. When it's inconsistent, right? When it's inconsistent, right? There's downstream confusion, additional work, potential risks in areas where precision really matters, right? If you think about reimbursement, for example, billing for services if the NDC is not properly translated,

[00:05:53] and someone can't get reimbursed for products that were dispensed, right? That's a huge problem. And so, precision is really, really important in this space. So, my understanding is that industry is adding a couple more digits to the drug code, and we're transitioning to 12 digits. Can you give us a little background on why is that? I kind of think I know we've seen other things in the industry where you run out of numbers type of scenario.

[00:06:22] But really, what does it mean? What are some of the challenges for the manufacturers, distributors, the pharmacies, the healthcare providers? I mean, it's a domino effect. People have to update systems. It kind of brings me back. Is this like, you know, the year 2000 where we had that? Yeah. No, folks, definitely kind of compare this to Y2K, right? And if you're old like me, you remember Y2K. Yeah, my toaster wasn't going to work if we did that. Right, right.

[00:06:51] And I think the way you categorize that question is, right, the scale of the impact here is important. So, like I said, I can't underscore how important of an attribute the NDC is. The move is really driven by a very practical issue, right? As you hinted at, right? So, the current format of 10 digits is running out of labeler code combinations. And based on what I just told you about the importance of the NDC, that can happen, right?

[00:07:19] So, as more drug products are introduced in the United States and more companies need identifiers for products, FDA needs a format that can support the healthcare system in the long term, right? So, there's a finite number of combinations at the 10-digit format. There are only so many years of runway that FDA has calculated of available 10-digit combinations.

[00:07:43] And as a result, this rule has passed to give industry the time to migrate to the 12 digits. Now, one of your follow-up questions might be, if it's going from 10 to 12 digits, are we going to be sitting back here on a podcast, right, in a little while to talk about it? And I can assure you, based on what FDA said, it will be many hundreds of years before we're going to have to do that. So, maybe our great-great-grandchildren will be on some version of the podcast to kind of talk about that, right? So, the rule does essentially two things.

[00:08:14] It expands the number of digits from 10 to 12. And so, organizations are going to have to be able to consume and utilize the new 12-digit format. But secondly, the rule eliminates what we call the linear barcode requirement for packaging, right? And so, it allows for both linear or nonlinear barcodes to appear on the packaging.

[00:08:33] And so, what that means is manufacturers can leverage 2D barcodes for their products, which, of course, is capable of storing a significantly larger amount of data. And so, the NDC is really commonly represented across different configurations today, right? And so, that creates variation for how it appears across product labels, databases, and ordering systems. The 10-digit format is variable length.

[00:09:01] So, those three segments that I hinted at, they can be based on how the numbers are converted, right? So, for example, you can have a 4 or a 5-digit labeler code. In the future state, the length of the NDC is going to be fixed. Every labeler code is going to be a fixed 6 digits, and then product code 4 digits, and then the packaging code will be 2 digits. So, that will always, always be the case. And so, moving to a standard format will create more consistency.

[00:09:30] When you think about manufacturers, for example, right? There's a lot of planning that they have to do. Product data, labeling, artwork, downstream communications with trading partners. So, one of the challenges with the expansion of the digits from 10 to 12 is that today, for meeting of other regulatory requirements in the healthcare space, particularly the Drug Security Supply Chain Act,

[00:09:57] the NDC is a required attribute that has to be passed between trading partners. Today, the labeler code is embedded into the GS1 GTIN, right? And so, that's how it's represented and passed between trading partners. Well, based on what I just told you, with the number of digits in the labeler code expanding to 6 digits, what that means is the labeler code won't fit into the GTIN.

[00:10:23] So, the NDC has to be represented in an application identifier, right? Along with the other required attributes. And so, as a consequence, there are only so many types of data carriers, right? Barcodes that can carry the data required for application identifiers. And of course, the 2D in healthcare is the most prevalent one of those, right?

[00:10:49] And I wanted to touch on two, distributors, pharmacies, healthcare providers, even retailers that handle over-the-counter products, for example, right? They're all going to have to evaluate how their systems store, display, scan, transmit, and reconcile NDCs across everyday operations. So, while the change sounds really simple, right? We're just moving from 10 to 12 digits, right? Can't be that complicated.

[00:11:19] It's actually really significant. NDC touches so many different systems. Organization have to look beyond the NDC code itself and thinking about master data integrations, scanning, reporting, reimbursements, right? Etc. The sooner organizations begin assessing their different touch points, right? Where are all the places that we have NDC within our organization? And where are all the places that we're transacting the NDC with our trading partners?

[00:11:48] They're going to be in a much better position to transition smoothly. Yeah, there's a lot of work to do there. I don't want to simplify it, but it's like the Y2K. It's you got to make sure you're turning over every stone to make sure that you're handing off this communication and you have the capabilities within it.

[00:12:08] Because as you pointed out, if you're moving to a 2D and you're going to a grocery store and they have an over-the-counter, is it handled at every checkout the same way? Or is it only at the pharmacy section? You know, and these are business decisions, but that's one of many, many different handoffs to consider. Yeah, the healthcare industry's gotten pretty good at this over the years, right? Implementing fairly large changes.

[00:12:37] And one of the ways they've gotten good at is making sure that they're communicating with their trading partners, right? And so they're being transparent about what's changing, you know, what's going to be different, how things have to be consumed. Organizations like GS1 publishing guidances, being in resources to help the industry be able to do that. There's so many different pieces of this, I guess. And to me it just sounded like this simple numbering update, right?

[00:13:05] But then not only being into, you can't embed it into a GTIN anymore, so that has to change. But, and I know you already touched on it, but from systems, just the systems, the product data, and the day-to-day operations across healthcare. Can you just go one level deeper in what those buzzwords are that folks internally are going to need to think about?

[00:13:32] Because it's not just the healthcare companies that need to talk about it, right? It's throughout the supply chain. Yeah, like does the WMS need a new data field? Right, right. Optical scanner. WMS, warehouse management system. Yeah. Just as simple. Yeah. Well, I mean there are so many different types of technology offerings out there, right? That organizations are leveraging today, regardless of their size, right?

[00:13:59] From the large manufacturer to the small mom and pop pharmacy, right? They're all using kind of different systems and technology, right? So part of the goal here is to have, we're speaking with one language, right? We like to talk about that at GS1 to leverage our standards to use one language so organizations can communicate with each other. But I think Liz, one of the things that you touched on is the challenges here, right? It's not just a numbering update.

[00:14:23] So really the first challenge here, if you think about it, the NDC rule applies to a much larger swath of products that includes over-the-counter medication and animal products, right? So for example, DSCSA applies only to prescription drugs. We have a much larger group here that's now impacted. And so there's a much larger number of organizations that are going to be impacted on some level, right?

[00:14:49] So we know, of course, manufacturers are impacted because they have to make changes to their artwork and labeling for how they're going to handle that. But distributors, for example, also can be impacted because they have got to be able to consume the 12-digit NDC and then pass it on to the trading partners. The pharmacies and the hospitals that leverage the NDC, of course, within their organizations have to be able to handle that. So a lot of coordination between the trading partners is going to have to happen.

[00:15:19] And you're also introducing some folks into the discussion about what we're going to do with the NDC that maybe didn't play a huge role as it relates to the DSCSA, right? Because they didn't handle prescription drugs, but they're going to have to here. The other challenge is that a lot of systems were built around the current NDC length, right? Or around conversion rules that have been in place for a long period of time.

[00:15:45] And so even a field length change, a leading zero, a barcode format can become an issue if systems aren't updated consistently. And so that's why it's not simply a numbering update. In our work group, the new NDC format working group, the first guide that we are working on is simply how to embed the NDC into a GS1 market. It sounds really simple, right? Like, okay, let's just do that.

[00:16:13] It's actually really complicated, right? Because there's lots of folks that have to weigh into that discussion. And then from there, as the industry understands how manufacturers are going to be doing this, other folks are going to have to come to the table to represent viewpoints for how they're going to be impacted in their everyday businesses. One of the things that stands out to me, too, is when you first said that over-the-counter drugs are going to be impacted now and they weren't before.

[00:16:42] Because when I think as a consumer where you can buy things like acetaminophen or ibuprofen or whatever, that could be a convenience store. And I'm assuming that anyone who sells these products has to be able to ingest this information. Am I right there? Yeah, they're going to have to be able to consume the 12-digit NDC. And they might not have to do that now, right? That's right. Yeah. So their systems are set to consume the 10-digit NDC.

[00:17:12] You know, manufacturers are still in the position of determining what, if any, artwork changes are needed depending on the types of products that they have, right? The types of where those products are being sold and into what environment, right? So that work's happening today. The rule just passed in March of this year, right? We have until the industry, when I say we, has until March of 2033 is the effective date of this rule.

[00:17:39] Those questions and decisions about the barcoding and labeling are happening now because they consume a lot of resources on behalf of the manufacturer. And they take a lot of time and collaboration to be able to organize. But then after that, you have the data exchange piece for how the data is going to be exchanged between the trading partners and how those downstream organizations are going to be able to consume the data that they need for the NDC.

[00:18:07] I was thinking of asking you about the timeline and you just kind of jumped right into that. 2033 seems like a long time away, but we're almost done with 26. And so it's like six years. And if you think six years is a long time, ask anybody whose kid just graduated from college because those are the fastest four to five years of their lives if, you know, like I did. So it goes hyper fast and there's a lot. So I have a kind of a two part question.

[00:18:35] One, will we start seeing kind of both out there? Do you think where you have the 10 digit in a linear barcode for the convenience stores and the 12 digit in a 2D barcode and they're right next to each other for folks that are trying to get ahead of the game and keep their products out, you know, and ubiquitous in the market. That's one question kind of like a yes or no type thing. But the other part is you don't have a lot of time.

[00:19:04] You think you have a lot of time, but you don't like you got to get working on this right now. And, you know, where should they start? I guess is what I'm asking for the audience is where should they start? You know, I was waiting for a two part question and I got my first one. So let's take the first part of what you asked about 10 and 12 digits at the same time because I'm glad you asked that. So FDA will start issuing the 12 digit NDC as of the effective date. Right. They won't be issuing 12 digits prior to that time.

[00:19:33] So they'll issue them in 2033. Right. 10 digit NDCs will continue to be used today and then for some time period after the 2033. So if you think about some products have expiration dates that maybe are 15 months, 18 months, two years, depending on the type of product. Right. Those products will be in the marketplace at the same time. That same product is going to have a 12 digit NDC.

[00:20:03] So organizations are going to have to, as we work through this transition as an industry, they're going to have to be able to consume a 10 digit NDC and a 12 digit NDC simultaneously. FDA is going to automatically convert 10 digit NDCs into 12. Right. It's when folks get new label or codes and there's new products that the new NDCs will be out there. Okay. So the second part of your question was about timing.

[00:20:33] And I'm really, really glad that you asked that. A lot of the folks that have worked in healthcare for a long time know that we don't do things really quickly here in healthcare. And it takes us a long time, but we need all of the time that we're given to get to the result. And it's just because the supply chain in healthcare is relatively complicated.

[00:20:51] And so that's one of the risks here is organizations that wait too long because they may be underestimate how many places the NDC appears across their environments. Right. And so it's not a one system or one label change because it touches master data, ERP systems, pharmacy platforms, warehouse systems and transactions claims, etc.

[00:21:16] It's really important that they have an understanding really quickly about where they're going to have an impact. And so the consequence here is organizations that wait too long, they can run into compressed timelines. Right. And there have competing technology priorities, resources within their organizations, limited vendor availability to be able to assist them with things and insufficient time for testing.

[00:21:42] Right. And so the real risk here, it's not just whether one organization can update its own system, but whether these updates can work across the broader network of trading partners. Right. And so now is the right time to start because FDA said they've given us a seven year runway as an industry, but the rule won't be extended. Right.

[00:22:03] So when the FDA starts issuing the 12 digit NDCs, they've stated there won't be extensions to this rule because there are system updates and changes that FDA has to do on their own side. Right. And so they're going to have to do that on the defective date. And so you can't wait along hoping that there'll be some kind of an extension. Right.

[00:22:25] So organizations really use that time now to have a plan, understand where they have an impact and really start getting involved in different industry options for participating in this process. Right. So we're at like the GS1 new NDC format working group. Right. It's a great venue. We have folks from all across different classes of trade that participate.

[00:22:47] And it's just an invaluable way to exchange information in a neutral format and work to address this problem that impacts the whole industry. And I believe from some information I was reading prior to this, you all have a conference coming up in November in Boston as well. Will this be a topic discussed there? Yeah, that's actually GS1 Global. So there's a GS1 Global Healthcare Conference.

[00:23:10] And so while the NDC won't be specifically discussed because the NDC is administered by the US Food and Drug Administration, there are learnings from how various countries across the globe categorize identifiers that the government has for their products. Right. And how they use for medical products and pharmaceutical products. So but yes, in Boston, November will be the GS1 Global Conference. All of this sounds like this bowl of spaghetti and I'm like pulling on point.

[00:23:40] OK, you have a 12 and then you have a 10 and you can have a 10 with a 12 after 2033, but not for a long because it's just it's crazy. But I think like the moral of the story is get started now, get involved like you just said. So when you look ahead at the transition to NDC, how does that support the bigger industry priorities such as traceability and interoperability and the adoption like to 2D barcodes, which you've already really touched on?

[00:24:08] So at a high level, the NDC transition really creates an opportunity for organization to think beyond just compliance and look how product identification can support a more connected supply chain. Right. A standard and 12 digit NDC helps reduce format variation and improves the consistency across product data across systems. And so that's really essential for interoperability.

[00:24:35] That's a buzzword here in health care is interoperability, being able to communicate between systems and trading partners using the same language. Right. And so it connects to the broader conversation when you think about looking ahead about data carriers, 2D barcodes, the adoption of these types of data carriers that can carry much more data in a smaller space and can support more automated capture at the bottom.

[00:25:02] And so what we're really talking about is increasing traceability by improving the accuracy and availability of product information as products that move through the supply chain. I was just going to say, you know, we had a child that had surgery last month and, you know, we go into the doctor's office and then you go to the hospital. And I just think of like all the process and everything.

[00:25:28] And some hospitals are more advanced than others, more digitized, shall I say, where they're literally scanning a 2D barcode, which is your file, your folder. Then they're putting the bracelet on the patient 2D barcode. Then they're scanning or 1D barcode. Then they're scanning 2D barcodes for the pharmaceutical drugs that they're leveraging, whether it's insulin or, you know, some type of painkiller.

[00:25:55] And then it's, oh, we're going to send you home and boom, boom. Here are two other things we gave you. I'm just thinking back to like, that's just within the hospital. Then you have the retailer. Then you have the distribution. It's a lot of systems where this single language and which barcode are you using or leveraging? And you have to have the agility to bounce between two. Yeah, absolutely.

[00:26:22] You know, it's interesting in the hospital environment. One of the things, of course, they're completely devoted, of course, to patient health and safety, right? Or hospital, of course. But they want to make sure that they get it right. And so they are very open to having the type of data capture structure that reduces the opportunity for manual errors, whether they're fat fingers or some other error, right?

[00:26:48] So if you can scan and you can automatically put the data into a system and it will flow to another system, when you think about something like the NDC and reduce errors, that's something the healthcare community is really rallying around, right? So that we can get better at the business of supporting patients, which is what we're all here to do. Yeah. Well, Ulrich, we can't thank you enough. We've kind of, believe it or not, run out of time already and kind of over the allotment that we had for today.

[00:27:17] But this is fascinating. I encourage, you know, our listeners to lean in. You know, I'm confident we have information on the gs1us.org website. I mentioned that conference, the global conference that's in November. There's other forums, the work group initiative that you said you just kicked off. We're working on some industry and customer facing material that will be on the gs1 webpage that will have updates, information, timelines, things that gs1 is doing.

[00:27:47] Really resources for the industry to go to and access so they can help plan around this process. That's perfect. And I think that, Liz, what I was going to say is this really kind of doubles down on the, what I would say, the retail Sunrise 2027 initiative that's going on where retailers across the globe are moving from the 1D barcode to the 2D. If you don't do it, this is going to force you in 2033.

[00:28:15] So it's coming sooner than later. Yeah. Multiple industries are doubling down. Ulrich, thank you again. Really appreciate it. This was wonderfully informable conversation. Thanks for having me. Thank you for joining the Next Level Supply Chain with GS1US. If you enjoyed today's show, you can subscribe to our feed or explore more great episodes wherever you get your podcasts. Don't forget to share and follow us on social media.

[00:28:44] Thanks again, and we'll see you next time.