Therapeutic Equivalence Codes: How the FDA Determines If Generic Drugs Can Be Substituted

When you pick up a prescription at the pharmacy, you might not realize that the pill in your hand wasn’t the one your doctor wrote on the script. That’s because, in most cases, it’s a generic version - cheaper, just as safe, and approved by the FDA to do the exact same job. But how does the FDA know it’s safe to swap? That’s where therapeutic equivalence codes come in. These simple letter codes - like AB, BC, or BX - are the FDA’s way of telling pharmacists and doctors which generics can be swapped without risk, and which ones need extra caution.

What Are Therapeutic Equivalence Codes?

Therapeutic equivalence codes are part of the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, better known as the Orange Book. First published in 1980, this official list is updated every month and tells you which generic drugs are interchangeable with their brand-name counterparts. The system was created after the Hatch-Waxman Act of 1984, which aimed to make generic drugs more accessible without compromising safety.

The code itself is made of one or two letters. The first letter is the most important. If it’s an A, the generic is considered therapeutically equivalent to the brand-name drug. That means it has the same active ingredient, same strength, same form (like tablet or capsule), and has passed strict bioequivalence tests. The FDA says this guarantees the generic will work the same way in your body - same effect, same side effects.

If the first letter is a B, the FDA hasn’t found enough evidence to say it’s interchangeable. That doesn’t mean it’s unsafe. It just means the data isn’t clear yet. Maybe the drug is an extended-release capsule, a topical cream, or an inhaler - products where it’s harder to prove the body absorbs the medicine the same way. These need more review.

What Do the Letters Actually Mean?

Not all A’s are the same. Here’s how the system breaks down:

• AB: This is the gold standard. The generic matches the brand in every way and has passed bioequivalence studies. You’ll often see AB1, AB2, AB3 - these just mean there are multiple brand-name versions (called Reference Listed Drugs) for the same drug, and the generic matches one of them specifically.
• BC: Extended-release products where bioequivalence is hard to prove. These are often flagged because the way the drug releases over time might vary slightly between brands.
• BD: Active ingredient has known bioequivalence problems. Rare, but happens with tricky compounds.
• BE: Delayed-release oral products, like enteric-coated tablets. These can be tricky because they’re designed to dissolve in specific parts of the gut.
• BT: Topical products like creams or gels. Absorption through the skin is hard to measure consistently.
• BN: Aerosol or nebulizer products. Delivery method matters a lot here.
• BP: Potential bioequivalence issues. Not confirmed, but under review.
• BR: Suppositories or enemas meant for systemic effect.
• BS: Drug standard issues - like inconsistent manufacturing quality.
• BT: Topical products with bioequivalence concerns.
• BX: Not enough data to decide. These are usually new products or ones with unusual delivery methods.

Only multisource prescription drugs get these codes. That means drugs made by more than one company. Brand-name-only products (like the original Lipitor) don’t get a code - they’re just listed as the Reference Listed Drug.

Why Do These Codes Matter?

In the U.S., 90% of prescriptions are filled with generics. But generics make up only 23% of total drug spending - saving patients and insurers about $370 billion a year. That’s possible because of the Orange Book and these codes.

Pharmacists rely on them daily. In 49 states, pharmacists can swap a brand-name drug for an A-rated generic without asking the doctor. That saves time, money, and hassle. A 2022 survey found 87% of community pharmacists use the Orange Book at least once a week to check codes before dispensing.

But here’s the catch: not everyone understands the system. A 2022 American Medical Association survey showed 42% of doctors are confused by B codes. Some think a B-rated drug is unsafe - when it might just be complex. Others mistakenly think an A-rated drug is always better than a B-rated one. That’s not true. A B-rated drug might be perfectly fine - it just hasn’t been studied enough to get an A.

What’s the Problem With B-Rated Drugs?

The biggest issue isn’t safety - it’s uncertainty. Complex drugs like inhalers, injectables, or topical creams don’t always behave the same way in the body even if they look identical on paper. Traditional bioequivalence tests - which measure blood levels of the drug - don’t always capture how the medicine works in the tissue.

For example, two asthma inhalers might release the same amount of medicine into the bloodstream, but one might deliver it deeper into the lungs. That difference could matter for the patient. Right now, the FDA doesn’t have a standardized way to test that. So those products often get a B code - even if they work fine in real life.

Dr. Duxin Sun from the University of Michigan points out that the current system was built for simple pills. It’s struggling to keep up with modern drug delivery systems. Between 2018 and 2022, the number of B-rated applications for complex generics rose by 22%.

How Do Pharmacists Use These Codes?

Pharmacists don’t just guess. They check the Orange Book - online or in print - before substituting. They look for two things: pharmaceutical equivalence (same ingredient, strength, form) and the therapeutic equivalence code.

If it’s an A-rated drug, they can swap it. In most states, they don’t even need to tell the doctor. But if it’s a B-rated drug, rules change. In 38 states, pharmacists must notify the prescriber before substituting. Some states require the doctor to specifically write “dispense as written” on the prescription to block substitution.

It’s not just about legality - it’s about safety. A 2023 study found pharmacists spend an average of 2.7 minutes per prescription verifying TE codes. That adds up to $1.2 billion in savings each year from avoiding unnecessary brand-name use.

How Does This Compare to Other Countries?

The U.S. system is unique. In Europe, the European Medicines Agency doesn’t use letter codes. Instead, they publish detailed scientific reviews for each generic application. That’s more thorough - but less practical for pharmacists on the front lines.

The FDA’s system is built for speed and clarity. It gives a clear yes-or-no answer: swap or don’t swap. That’s why it’s worked so well for over 40 years. But as drugs get more complex, that simplicity is starting to show cracks.

What’s Changing in 2025?

The FDA is working on updates. In 2022, they released a draft guidance to improve how they evaluate complex generics. They’re expanding their Product-Specific Guidelines - now over 1,850 documents - to give manufacturers clearer rules on how to prove bioequivalence for tricky drugs.

The goal? Reduce B-rated products for complex generics by 30% by 2027. That means better science, better tests, and more generics that can be swapped without hesitation.

They’re also exploring real-world data - like patient outcomes from electronic health records - to supplement lab-based bioequivalence studies. That could help classify products that work well in practice, even if lab tests are inconclusive.

What Should You Do?

If you’re a patient: Don’t panic if your generic has a B code. Ask your pharmacist: “Is this safe to swap?” They can tell you if it’s just a data issue or something more serious.

If you’re a prescriber: Know your codes. Don’t assume a B-rated drug is inferior. Sometimes it’s just the FDA hasn’t caught up yet. If you’re unsure, check the Orange Book or ask your pharmacy.

If you’re a pharmacist: Use the Orange Book every time. Don’t rely on memory. And if a patient questions a substitution, explain what the code means - it builds trust.

Final Thoughts

Therapeutic equivalence codes are one of the quiet heroes of modern medicine. They make generics safe, affordable, and widely available. But they’re not perfect. As drugs get more complex, the system has to evolve. Right now, it works for pills - and that’s most of what we take. But for inhalers, creams, and injectables? We’re still learning.

The FDA isn’t abandoning the system. They’re upgrading it. And for now, if you see an A code, you can be confident - your generic is just as good as the brand.