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 behind the scenes, a complex system is deciding whether the pill in your hand is a safe swap for the brand-name drug your doctor prescribed. That system? Therapeutic equivalence codes. These aren’t just letters on a label-they’re the FDA’s official way of telling pharmacists and doctors which generic drugs can be swapped without risking your health or treatment outcome.

What Are Therapeutic Equivalence Codes?

Therapeutic equivalence codes are a simple, two-letter system used by the U.S. Food and Drug Administration to rate whether a generic drug can be substituted for a brand-name drug. They appear in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, better known as the Orange Book. First published in 1980, this guide is updated monthly and is the go-to resource for pharmacists, doctors, and state pharmacy boards.

The system was created after the 1984 Hatch-Waxman Act, which aimed to speed up access to cheaper generics without sacrificing safety. The core idea? If two drugs have the same active ingredient, strength, dosage form, and route of administration-and if they work the same way in your body-then they’re interchangeable.

But here’s the catch: not all generics are created equal. That’s where the codes come in. The first letter tells you if substitution is approved. The second letter adds details about special cases.

The Meaning Behind the Letters: A and B Ratings

If you see an A as the first letter, you’re looking at a drug the FDA says can be swapped without hesitation. That means it’s both pharmaceutically equivalent (same ingredients, same form) and bioequivalent (absorbed into your bloodstream at the same rate and amount as the brand). About 90% of all generic drugs in the U.S. carry an A rating.

But A isn’t just A. There are subcodes:

• AB - The most common. The generic has passed all bioequivalence tests. You can swap it freely.
• AB1, AB2, AB3, AB4 - Used when multiple brand-name drugs exist for the same condition. These numbers tell you which brand the generic was tested against. If your doctor prescribed Brand X, you need the generic labeled AB1 if that’s the one matched to Brand X.

Now, if you see a B as the first letter? That’s a red flag. The FDA doesn’t yet confirm that this generic can be safely swapped. It doesn’t mean it’s unsafe-it means there’s not enough proof yet. These are often complex drugs where standard testing doesn’t work well.

Here are some common B codes and what they mean:

• BC - Extended-release tablets or capsules with potential bioequivalence issues.
• BD - Active ingredients with known bioequivalence problems in past studies.
• BT - Topical creams or ointments where skin absorption is hard to measure.
• BN - Inhalers or nebulizer products with delivery challenges.
• BX - Not enough data to make a call. Don’t substitute unless your doctor says so.

These B codes aren’t just bureaucratic noise. They’re warnings. A 2022 survey by the American Medical Association found that 42% of doctors were confused about what B codes meant. Some pharmacists refused to substitute even when it was safe, while others substituted when they shouldn’t have. That’s why knowing these codes matters.

Why the System Works-And Where It Falters

The beauty of the TE code system is its simplicity. In 49 states, pharmacists can swap an A-rated generic without calling the doctor. That saves time, reduces costs, and keeps patients on their meds. In 2023, generic drugs saved the U.S. healthcare system $370 billion. Almost all of that savings came because of reliable substitution-made possible by these codes.

But the system was built for simple pills-tablets and capsules you swallow. It struggles with complex products. Think: inhalers, injectables, topical creams, or long-acting shots. For these, measuring how much drug enters your bloodstream isn’t enough. How it’s absorbed, how it’s released, how it sticks to your skin or lung tissue-those matter too. Yet the current tests don’t always capture that.

Dr. Duxin Sun, a professor of pharmaceutics at the University of Michigan, put it plainly: “Current TE codes for topical and inhaled products may not reflect real-world effectiveness.” That’s why 22% more complex generics received B ratings between 2018 and 2022. The FDA admits this gap. In its 2022 draft guidance, it pledged to develop better methods for testing these drugs.

How Pharmacists Use the Codes Daily

For pharmacists, the Orange Book isn’t optional-it’s mandatory. In 38 states, they’re legally required to check TE codes before substituting. A 2022 survey of 1,200 independent pharmacists found that 87% rely on the Orange Book weekly. On average, they spend 2.7 minutes per prescription verifying the code. That adds up to billions in savings-but also adds pressure.

Pharmacy students spend 4 to 6 hours learning this system during their training. Yet many still get tripped up. For example, a pharmacist might see a generic labeled AB2 and assume it’s interchangeable with any brand. But if the doctor prescribed the drug that matches AB1, swapping to AB2 could mean a different formulation. That’s why the suffixes matter.

And then there’s the B-code confusion. A 2023 American Pharmacists Association study found that 28% of pharmacists had refused to substitute a B-rated drug that was, in fact, appropriate for the patient. Why? Fear. Lack of training. Unclear guidelines.

How This Compares to the Rest of the World

The U.S. system is unique. In Europe, the European Medicines Agency (EMA) doesn’t use a simple letter code. Instead, they publish detailed scientific reviews for each generic drug. It’s thorough-but not practical for daily pharmacy use. A pharmacist in Germany can’t glance at a label and know if substitution is allowed. They need to dig into a 50-page report.

The FDA’s system, by contrast, gives instant clarity. That’s why it’s so widely adopted. But it’s also why it’s under pressure. As drug technology gets more complex, the two-letter code is becoming outdated. The FDA’s 2023-2027 strategic plan aims to fix that. They’re working on new evaluation methods that include real-world data, advanced modeling, and better in vitro tests.

What This Means for You

If you’re taking a generic drug, here’s what you should do:

• Check the label or the pharmacy receipt. Look for the TE code. If it starts with A, you’re good to go.
• If it starts with B, ask your pharmacist: “Is this safe to swap?” Don’t assume.
• If your doctor prescribed a brand-name drug and you’re getting a generic, confirm the code matches what’s listed in the Orange Book.
• Never switch between two different generics with different AB numbers unless your doctor approves it.

Remember: the goal isn’t just to save money. It’s to make sure your treatment works. The TE code system is designed to protect you-not just cut costs. When it works right, it’s one of the most successful public health tools in modern medicine.

What’s Next for Therapeutic Equivalence Codes?

The FDA is not standing still. With over 1,850 Product-Specific Guidance documents now available, they’re giving drug makers clearer rules for proving bioequivalence. Their goal? Reduce B-rated products for complex drugs by 30% by 2027.

Expect to see more real-world data used in evaluations-like patient outcomes from electronic health records, not just blood tests in labs. Also, the FDA is exploring AI tools to predict how a drug will behave in the body based on its chemical structure.

But the core principle won’t change: if a generic works the same as the brand, you should be able to use it. The codes just help us know when that’s true.

What to Do If You’re Confused

If you’re unsure about your medication, don’t guess. Go to the FDA’s Orange Book website and search for your drug by name. You’ll see its TE code, the brand it was tested against, and any notes. If you’re still confused, ask your pharmacist to show you the code and explain it. You have a right to know what you’re taking-and why it’s safe.

The bottom line? Therapeutic equivalence codes are there to protect you. They’re not perfect, but they’re the best system we have. And when used correctly, they make healthcare safer, simpler, and more affordable-for everyone.