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

When your pharmacist hands you a generic pill instead of the brand-name drug your doctor prescribed, you might not think twice. But behind that simple swap is a complex, science-backed system run by the FDA to make sure it’s safe. That system? Therapeutic equivalence codes. These two-letter codes-like AB, BC, or BX-are the FDA’s way of telling pharmacists: Yes, you can substitute this generic. No, you can’t. It’s not guesswork. It’s not opinion. It’s data.

What Therapeutic Equivalence Really Means

Therapeutic equivalence isn’t just about having the same active ingredient. Two drugs can have identical chemicals and still behave differently in your body. Maybe one dissolves too slowly. Maybe the other releases its dose too fast. That’s why the FDA doesn’t just check the label. It checks how the drug works inside you.

To be rated therapeutically equivalent, a generic drug must pass three tests:

• Pharmaceutical equivalence: Same active ingredient, strength, dosage form, and route of administration.
• Bioequivalence: The generic delivers the same amount of drug into your bloodstream at the same rate as the brand-name version.
• Clinical equivalence: No difference in safety or effectiveness when used as directed.

Only products that clear all three get an ‘A’ code. That’s the green light for substitution. If any part fails-even slightly-you get a ‘B’ code, and the pharmacist can’t swap it without checking with your doctor.

The Orange Book: The FDA’s Secret Weapon

You won’t find therapeutic equivalence codes on drug packaging. You won’t see them in your prescription. They live in one place only: the Approved Drug Products with Therapeutic Equivalence Evaluations, better known as the Orange Book. First published in 1980, this is the FDA’s official database of every approved drug and its substitution status.

Every month, the FDA updates it. New generics get added. Existing codes change if new studies come out. In 2023, the Orange Book listed over 14,000 approved drug products. Of those, about 12,600-90%-had an ‘A’ rating. That means for most prescriptions, substitution is automatic and legally allowed in 49 states.

Pharmacists rely on this book daily. A 2022 survey found that 73% of community pharmacists check the Orange Book at least once a week. For them, it’s not optional-it’s the law.

Decoding the Letters: A, B, and Everything In Between

The first letter tells you the big picture. The second (and sometimes third) letter adds detail.

• A-rated: Safe to substitute. These are the most common.
• B-rated: Not automatically substitutable. More scrutiny needed.

But here’s where it gets messy. Not all ‘A’ codes are the same. If a drug has multiple brand-name versions (called Reference Listed Drugs), the FDA adds numbers to keep things straight:

• AB1, AB2, AB3, AB4: These mean the generic matches a specific brand-name version. You can’t swap between AB1 and AB2 unless your doctor says it’s okay.

And then there are the ‘B’ codes with extra letters:

• BC: Extended-release products with bioequivalence questions.
• BD: Known bioequivalence problems.
• BT: Topical creams or ointments where absorption is hard to measure.
• BN: Inhalers or nebulizers.
• BR: Suppositories or enemas.
• BS: Issues with the drug’s standard quality.
• BT: Topical products with unclear absorption.
• BX: Not enough data to decide.

A ‘BX’ code doesn’t mean the drug is unsafe. It just means the FDA doesn’t have enough proof yet to say it’s equivalent. That’s why pharmacists can’t substitute it without a doctor’s okay.

Why Some Generics Get ‘B’ Codes Even When They Work

Here’s the frustrating part: some ‘B’-rated drugs are just as effective as their brand-name counterparts. But the FDA’s testing tools weren’t built for complex products.

Think about a topical cream for eczema. How do you prove two creams absorb the same amount of medicine through skin? You can’t just measure blood levels like you can with a pill. Same with inhalers, injectables, or long-acting patches. These products need more advanced testing-but the FDA’s current methods often fall short.

Dr. Duxin Sun, a professor at the University of Michigan, put it bluntly: “Current TE codes for topical, inhaled, and complex injectable products may not adequately reflect therapeutic equivalence.” That’s why you’ll see ‘B’ codes on drugs that many doctors and pharmacists have used safely for years.

The result? Confusion. A 2022 American Medical Association survey found that 42% of physicians didn’t understand how to interpret ‘B’ codes. Some refused to let pharmacists substitute them-even when it was safe. Others didn’t realize a ‘B’ rating didn’t mean the drug was ineffective.

What Happens When You Get a ‘B’-Rated Drug

If your prescription says ‘B’, your pharmacist can’t swap it unless your doctor says it’s okay. In 38 states, pharmacists are legally required to notify your doctor if they want to substitute a ‘B’-rated drug. That means a phone call, a fax, or an electronic message. It slows things down.

But here’s the good news: you can still use the drug. ‘B’ doesn’t mean ‘bad’. It means ‘needs review’. If your doctor knows the drug works for you, they can write “Dispense as Written” on the prescription. That overrides the substitution rule.

And if you’re paying out of pocket? Many ‘B’-rated generics are still cheaper than the brand name. So even if you can’t swap automatically, you might still save money.

How This System Saves Money-And Lives

Generic drugs make up 90% of prescriptions in the U.S. But they cost only 23% of what brand-name drugs do. That’s over $370 billion saved every year.

Therapeutic equivalence codes are the engine behind that savings. Without them, pharmacists couldn’t confidently substitute generics. Doctors would have to write new prescriptions. Insurance companies would pay more. Patients would pay more.

A 2023 study by the American Pharmacists Association found that pharmacists spend an average of 2.7 minutes per prescription checking TE codes. That adds up to billions in savings because it prevents costly brand-name prescriptions.

And here’s the kicker: since the system started in the 1980s, there’s never been a single documented case of a patient harmed because an FDA-approved generic was substituted.

What’s Changing in 2025?

The FDA knows the system isn’t perfect. Complex drugs are on the rise. Inhalers, patches, injectables-these aren’t going away. So in 2022, the FDA released a draft guidance to update how it evaluates therapeutic equivalence for these products.

The goal? Reduce ‘B’ ratings for complex generics by 30% by 2027. How? By using better tools: real-world data, advanced modeling, and more reliable in vitro tests. They’re also expanding their Product-Specific Guidelines to 1,850 documents-each one giving manufacturers clear instructions on how to prove their generic works.

The future of therapeutic equivalence won’t rely only on blood tests. It’ll include patient outcomes, real-world usage, and smarter science. But the core principle stays the same: substitution must be safe, effective, and backed by evidence.

What You Need to Know as a Patient

You don’t need to memorize AB1 vs BX. But you should know this:

• If your generic looks different than your last refill, ask your pharmacist why. It might be a different AB code.
• If your prescription says ‘B’, don’t assume it’s unsafe. Ask your doctor if substitution is okay.
• If you’ve had side effects with one generic, tell your doctor. It might not be the drug-it might be the filler or coating.
• Always check your receipt. It should list the generic name and manufacturer. If you’re unsure, call your pharmacist.

Therapeutic equivalence codes exist to protect you-not to confuse you. They’re not perfect. But they’re the best system we have. And right now, they’re saving billions while keeping millions of patients safe.