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 think about whether the pill in your hand is the exact same as the one your doctor prescribed. But behind every generic drug you take, there’s a detailed science-based system that decides if it’s safe to swap. That system is the FDA’s therapeutic equivalence codes. These codes aren’t just jargon-they’re the reason millions of Americans save money every year without risking their health.

What therapeutic equivalence really means

Therapeutic equivalence isn’t about drugs looking the same or having the same shape. It’s about whether two drugs-whether brand-name or generic-do the same thing in your body. The FDA says a generic is therapeutically equivalent if it has the same active ingredient, strength, dosage form, and route of administration as the brand-name drug, and if it delivers the same amount of medicine into your bloodstream at the same rate.

This isn’t guesswork. To earn a therapeutic equivalence rating, a generic drug must pass strict bioequivalence testing. That means scientists compare how fast and how much of the drug gets absorbed in healthy volunteers. If the generic’s absorption is within 80% to 125% of the brand-name drug’s, it passes. That’s the standard. No exceptions.

The FDA’s system was created in the 1980s under the Hatch-Waxman Act. Before that, pharmacists had no clear rules about swapping drugs. Now, they have a reliable guide: the Approved Drug Products with Therapeutic Equivalence Evaluations, better known as the Orange Book. Every month, the FDA updates it with new approvals, code changes, and withdrawn products.

The letter system: A, B, and what they mean

The FDA uses a simple letter code to tell pharmacists whether a drug can be substituted. It’s not complicated once you know the rules.

• A-rated: These are interchangeable. If a drug has an A code, your pharmacist can swap it for the brand-name version-or for another generic-without asking your doctor. Over 90% of all generics in the U.S. have an A rating.
• B-rated: These are not automatically interchangeable. A B code means there’s uncertainty. Maybe the drug is an extended-release capsule, a topical cream, or an inhaler. These are harder to test, and the FDA needs more data before saying they’re safe to swap.

There are also sub-codes under A and B. For example:

• AB means the drug meets all bioequivalence standards.
• AB1, AB2, AB3 are used when multiple brand-name drugs exist as references. Say you’re taking a generic version of Drug X. If there are two different brand versions of Drug X on the market, the generic might be equivalent to one (AB1) but not necessarily the other (AB2). Your pharmacist needs to match the right one.
• BC stands for extended-release products with potential bioequivalence issues.
• BT is for topical products like creams or gels where absorption is hard to measure.
• BX means there’s not enough data yet. This is rare, but it happens with brand-new generics.

These codes aren’t random. Each one is backed by data from clinical studies, lab tests, and real-world evidence. The FDA doesn’t assign them lightly.

Why pharmacists rely on the Orange Book

Pharmacists don’t guess. They check. Every time a prescription comes in for a brand-name drug, they look up the generic alternatives in the Orange Book. They don’t just look at the name-they check the TE code.

According to a 2022 survey of 1,200 independent pharmacists, 87% said the TE code system makes substitution faster and safer. About 73% check the Orange Book at least once a week. For some, it’s part of their daily routine.

The system works because it’s built into state laws. In 49 states, pharmacists can substitute an A-rated generic without calling the doctor. Only one state requires a prescriber’s permission every time. That’s because the FDA’s codes have been trusted for decades. Since 1984, there hasn’t been a single documented case of a patient harmed by an FDA-approved generic substitution.

Where the system breaks down

The TE code system is brilliant for simple pills-like antibiotics, blood pressure meds, or antidepressants. But it struggles with complex products.

Take topical creams. A generic version might have the same active ingredient as the brand, but if the cream base is thicker or absorbs slower, the drug might not work the same way. The FDA can’t easily test absorption through skin. So many of these get a BT code-even if they’re clinically effective.

Same with inhalers, injectables, or long-acting capsules. These drugs don’t just need to be absorbed the same way-they need to release over time, target the right tissue, or behave in a specific environment. Standard blood tests can’t always capture that.

That’s why about 10% of generics still carry B codes. Some are legitimate safety flags. Others are outdated. A 2021 study in the AAPS Journal found that 37% of B-rated products had no clinical evidence of problems-they just hadn’t been re-evaluated.

Doctors aren’t always sure what to do with B codes. A 2022 AMA survey showed that 42% of physicians were confused about them. Some refused to allow substitution even when it was safe. Others didn’t know how to interpret the codes at all.

Real impact: Savings and access

The numbers speak for themselves. Generic drugs make up 90% of all prescriptions filled in the U.S., but only 23% of total drug spending. That’s over $370 billion saved every year.

That savings only works because pharmacists can substitute A-rated drugs. Without the TE code system, every generic would need a new prescription. That would mean more calls to doctors, more delays, more cost.

Pharmacists spend an average of 2.7 minutes per prescription checking TE codes. That adds up to millions of hours a year. But it’s worth it. The system keeps drugs affordable and accessible.

What’s next for therapeutic equivalence codes

The FDA knows the system isn’t perfect. In 2022, it released a draft guidance to improve how it evaluates complex drugs. The goal? Reduce B-rated products for complex generics by 30% by 2027.

They’re doing this by:

• Expanding Product-Specific Guidances (PSGs)-over 1,850 now-to give manufacturers clearer rules on how to prove equivalence.
• Using real-world data, like patient outcomes and electronic health records, to supplement lab tests.
• Working with international regulators to align standards where possible.

The future of TE codes isn’t about making them more complicated. It’s about making them smarter. More accurate. More inclusive of the new kinds of drugs we’re developing.

What you should know as a patient

You don’t need to memorize AB1 or BT codes. But you should know this:

• If your pharmacist switches your drug and says it’s an FDA-approved generic, it’s safe.
• If you’re switched to a drug with a B code, ask why. It might be a mistake-or it might be because your drug is complex and needs special handling.
• Don’t assume all generics are the same. The TE code tells you which ones are interchangeable.
• Check your prescription label. If the name changed, ask if it’s an A-rated substitute.

Therapeutic equivalence codes exist to protect you-not to confuse you. They’re the quiet backbone of affordable medicine in America.