Therapeutic Equivalence Codes: How the FDA Determines Which Generics 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 paper. More than 90% of prescriptions in the U.S. are filled with generic drugs. But not all generics are treated the same. The FDA uses a hidden code system - called therapeutic equivalence (TE) codes - to tell pharmacists exactly which generics can be swapped in without changing how the medicine works for you.

What Are Therapeutic Equivalence Codes?

Therapeutic equivalence codes are the FDA’s way of rating whether a generic drug can safely replace a brand-name drug. These codes appear in the Orange Book, officially titled Approved Drug Products with Therapeutic Equivalence Evaluations. The system started in 1980 and has been updated ever since to keep up with new drugs and better science.

The code is usually one or two letters. The first letter tells you everything you need to know:

• A means the generic is considered therapeutically equivalent to the brand-name drug. You can swap it without worry.
• B means the FDA hasn’t confirmed it’s equivalent. It might work fine - but there’s not enough proof yet.

That’s it. Simple. But the details behind those letters matter a lot.

What Makes a Generic an ‘A’?

For a generic to get an ‘A’ rating, it must pass three tests:

1. Pharmaceutical equivalence - same active ingredient, same strength, same dosage form (like tablet or capsule), and same route (taken by mouth, injected, etc.).
2. Bioequivalence - the generic must deliver the same amount of medicine into your bloodstream at the same speed as the brand. This is tested in healthy volunteers using blood samples.
3. Same clinical effect and safety - the FDA looks at the labeling, side effects, and how the drug behaves in real use.

If it passes all three, it gets an ‘A’. But there are sub-codes too. For example:

• AB1, AB2, AB3, AB4 - used when there’s more than one brand-name drug as a reference. Each number points to a different original product. You can’t swap between AB1 and AB2 unless they’re proven interchangeable.

These codes help pharmacists avoid mixing up products that look similar but aren’t truly interchangeable.

What Does a ‘B’ Code Really Mean?

A ‘B’ code doesn’t mean the generic is bad. It means the FDA doesn’t have enough data to say it’s equivalent. This often happens with complex drugs:

• BC - extended-release tablets or capsules
• BT - topical creams or ointments
• BD - drugs with known bioequivalence issues
• BX - not enough data to judge

Take topical creams, for example. Two creams might have the same active ingredient and strength. But if one absorbs into the skin faster than the other, it could work differently. Standard blood tests don’t capture that. So the FDA gives it a ‘B’ - not because it’s unsafe, but because the science isn’t settled yet.

Doctors and pharmacists often get confused by ‘B’ codes. A 2022 survey found that 42% of physicians didn’t understand what ‘B’ meant. Some thought it meant the drug was unsafe. Others refused to let pharmacists substitute it - even when the drug was clinically fine.

Why Does This System Exist?

The whole point of TE codes is to make generic substitution safe and simple. Before this system, pharmacists had no clear rules. Some substituted freely. Others never did. Patients got mixed results. The FDA created the Orange Book to bring order to the chaos.

Today, 90% of generic drugs in the U.S. have an ‘A’ rating. That’s why 49 states allow pharmacists to swap generics automatically - no doctor approval needed. This saves the healthcare system about $1.2 billion every year.

The system works best for simple pills taken by mouth - like antibiotics, blood pressure meds, or antidepressants. For these, bioequivalence is easy to prove. But for complex products - like inhalers, injectables, or creams - the science is harder. That’s why the FDA is working on new ways to evaluate them.

How Pharmacists Use TE Codes

Every time a prescription comes in, pharmacists check the Orange Book - either online or through their pharmacy software. They look for the TE code. If it’s ‘A’, they can substitute without asking. If it’s ‘B’, they usually check with the prescriber.

On average, pharmacists spend 2.7 minutes per prescription verifying the TE code. That adds up. But it’s worth it. In 2023, the FDA’s Orange Book website had 1.7 million unique visitors - mostly pharmacists, doctors, and pharmacy students.

Pharmacy schools now teach TE codes as part of the core curriculum. Students spend 4 to 6 hours learning how to read them. That’s because mistakes can be costly. Substituting a ‘B’-rated drug without knowing the risks could lead to underdosing, overdosing, or side effects.

How It Compares to Other Countries

The U.S. system is unique. The European Medicines Agency (EMA) doesn’t use codes like this. Instead, they publish long scientific reviews for each generic. It’s thorough - but not practical for a busy pharmacist trying to fill 50 prescriptions in an hour.

The FDA’s code system is built for speed and clarity. It’s designed to be used at the counter, not in a lab. That’s why it’s so effective in the U.S. - where generics make up 90% of prescriptions but only 23% of drug spending.

Other countries don’t have a direct equivalent. Canada uses a similar system but with fewer categories. The UK relies on clinical judgment and local guidelines. The U.S. stands out because it’s standardized, public, and legally enforced.

What’s Changing in 2026?

The FDA knows the system has limits. Between 2018 and 2022, applications for ‘B’-rated complex generics jumped 22%. These include things like inhalers for asthma, injectables for diabetes, and topical treatments for eczema.

In 2022, the FDA released a draft guidance proposing new ways to evaluate these products - using real-world data, better testing methods, and even computer modeling. They’re aiming to reduce ‘B’ ratings for complex drugs by 30% by 2027.

They’ve also expanded their Product-Specific Guidances (PSGs) to over 1,850 documents. These are detailed instructions for companies on how to prove bioequivalence for specific drugs. More guidance means fewer ‘B’ codes in the future.

The goal isn’t to eliminate ‘B’ codes. It’s to make them more accurate. If a drug is truly equivalent, it should get an ‘A’. If it’s not - we need to know why.

What You Should Know as a Patient

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

• If your pharmacist gives you a different pill than what your doctor prescribed, it’s probably a generic with an ‘A’ rating - and it’s safe.
• If you’re switched to a ‘B’-rated drug, ask why. It might be because the brand is out of stock, or because your insurance requires it. But you have the right to ask for the original.
• Don’t assume a ‘B’ means it’s unsafe. It just means the science is still catching up.

The bottom line: the FDA’s TE code system is one of the most successful public health tools in modern medicine. It’s saved billions, made generics reliable, and kept patients safe. But it’s not perfect. And it’s still evolving.