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

When you pick up a prescription, you might not realize that the pill in your hand isn’t the brand-name drug your doctor wrote on the script. It’s probably a generic. And the reason you can swap it without risking your health? The FDA’s therapeutic equivalence codes.

What Are Therapeutic Equivalence Codes?

Therapeutic equivalence codes are the FDA’s way of telling pharmacists and doctors: “This generic is safe to swap for the brand.” They’re not guesses. They’re based on hard science - pharmaceutical equivalence, bioequivalence, and real-world safety data.

These codes show up in the FDA’s Orange Book, officially called Approved Drug Products with Therapeutic Equivalence Evaluations. First published in 1980, it’s updated every month. Over 14,000 drug products are listed there. About 90% of them carry an “A” code - meaning they’re approved for automatic substitution.

The system exists because of the Hatch-Waxman Act of 1984. Before that, generic drugs were hard to get approved. The law changed that by creating a faster path for generics - as long as they proved they worked just like the brand. The TE code system was born to make sure that promise stayed safe.

How the FDA Rates Substitutability: The A and B Codes

The first letter tells you everything.

A means the generic is therapeutically equivalent to the brand. You can swap it without asking your doctor. But there’s more to it. The second letter adds detail:

• AB - The gold standard. The generic matches the brand in active ingredient, strength, dosage form, and has proven bioequivalence through blood level studies. AB1, AB2, AB3, AB4? Those just mean there are multiple brand versions out there, and this generic matches one of them.
• BC - Extended-release pills or patches. The FDA can’t confirm bioequivalence with standard tests, so it’s flagged. Not unsafe - just needs more scrutiny.
• BD - Known bioequivalence problems. Rare, but happens. Usually because the drug is tricky to absorb.
• BT - Topical creams or gels. Hard to prove skin absorption equals blood levels. Many get this code even if they work fine.
• BN - Inhalers and nebulizers. Delivery matters as much as the drug itself.
• BX - Not enough data. The FDA doesn’t have enough evidence to say yes or no.

You’ll rarely see a “B” code on a simple tablet like lisinopril or metformin. But for complex products - like inhalers, injectables, or topical creams - “B” is common. That doesn’t mean they’re bad. It just means the science to prove they’re interchangeable is harder to get.

Why This Matters for Pharmacists and Patients

In 49 states, pharmacists can swap an “A”-rated generic without calling your doctor. That saves time, money, and hassle. According to the National Association of Boards of Pharmacy, over 90% of generic prescriptions in the U.S. are “A” rated.

Pharmacists check the Orange Book weekly. A 2022 survey found 87% of community pharmacists rely on TE codes to make substitution decisions. Each check takes about 2.7 minutes - but that adds up to $1.2 billion in savings a year because generics cost far less.

But here’s the problem: “B” codes confuse everyone. A 2022 AMA survey found 42% of doctors don’t understand what “B” means. Some think it means “unsafe.” Others think it means “can’t be swapped.” Neither is true.

Take a topical cream with a BT code. It might work just as well as the brand. But because skin absorption is hard to measure, the FDA gives it a “B.” Some pharmacists refuse to substitute it - even though the patient would get the same benefit. That’s a missed opportunity.

How It Compares to the Rest of the World

The U.S. is unique in using a simple code system. In Europe, the EMA doesn’t use letters. Instead, they publish long scientific reviews for each generic. It’s thorough - but not practical for a busy pharmacy.

The FDA’s system is designed for speed and clarity. A pharmacist sees “AB” on the label, swaps it, and moves on. No extra paperwork. No calls to the doctor. That’s why 90% of prescriptions in the U.S. are filled with generics - and why the country saves $370 billion a year on drug costs.

Other countries rely on doctors to decide substitution. In the U.S., the system lets pharmacists be part of the safety net - not just dispensers.

Where the System Falls Short

The TE code system works great for simple pills. But it’s struggling with modern drugs.

Topical creams, inhaled medicines, complex injectables - these aren’t like swallowing a tablet. The drug’s behavior in the body depends on how it’s delivered. Standard blood tests don’t always capture that.

Dr. Duxin Sun from the University of Michigan says: “Current bioequivalence tests for inhalers and creams might not reflect real-world effectiveness.”

The FDA admits this. In 2022, they released a draft guidance to update how they evaluate complex products. They’re now using more real-world data, in vitro testing, and even patient outcomes to judge equivalence - not just blood levels.

Between 2018 and 2022, applications for “B”-rated complex generics rose 22%. That’s not because more drugs are flawed. It’s because more complex drugs are being made - and the old system isn’t built for them.

What You Should Do

If you’re a patient:

• Ask your pharmacist: “Is this generic an ‘A’ or ‘B’?”
• If it’s “A,” you’re good to go.
• If it’s “B,” ask if it’s been used safely by others. Don’t assume it’s unsafe.
• Never refuse a generic just because it’s not the brand name. Most are just as effective.

If you’re a prescriber:

• Learn what “B” really means. It’s not a red flag - it’s a caution sign.
• Don’t write “Dispense as written” unless you have a real clinical reason.
• Check the Orange Book yourself. It’s free and searchable online.

If you’re a pharmacist:

• Always verify the TE code before swapping.
• When you substitute a “B”-rated product, document it and notify the prescriber if your state requires it.
• Use the FDA’s Product-Specific Guidances - they’re updated monthly and explain exactly what data is needed for each drug.

The Future of Generic Substitution

The FDA’s 2023-2027 plan aims to reduce “B” ratings for complex generics by 30% by 2027. That means better testing methods, more data, and smarter rules.

They’re already using real-world evidence - like patient records from hospitals - to show if a generic works just as well. That’s a big shift. Instead of relying only on lab tests, they’re asking: “Does this drug actually help people?”

The goal isn’t to make substitution harder. It’s to make it smarter. More complex drugs are coming. The system has to keep up.

For now, the TE code system is still the backbone of safe, affordable medicine in the U.S. It’s not perfect. But for millions of people taking generics every day, it works.