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. More than 90% of prescriptions filled in the U.S. are generics. But not all generics are treated the same by the FDA. Some can be swapped freely. Others? Not so much. That’s where therapeutic equivalence codes come in - the FDA’s secret language for telling pharmacists exactly which generics are safe to substitute.

What Are Therapeutic Equivalence Codes?

Therapeutic equivalence codes are simple letter combinations - like AB, BC, or BX - that tell you whether a generic drug can replace a brand-name version without risking your health. These codes appear in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, better known as the Orange Book. First published in 1980, this public database is updated every month and used daily by pharmacists, doctors, and insurers to make substitution decisions.

The system exists because not all generics are created equal. Two pills might have the same active ingredient, but if one dissolves slower, or is absorbed differently, it could change how well it works. The FDA doesn’t just assume they’re the same. They test them.

The Two Big Letters: A and B

The first letter in the code is the most important. It tells you whether substitution is allowed.

• A means the generic is considered therapeutically equivalent to the brand. You can swap it without hesitation.
• B means the FDA doesn’t yet have enough evidence to say it’s equivalent. Don’t substitute unless your doctor says so.

That’s it. Simple. But here’s where it gets messy.

What the Sub-Letters Mean (AB1, BC, BT, BX…)

The FDA doesn’t stop at just A or B. After the first letter, extra letters give you details about why a product got that rating.

• AB is the gold standard. The generic matches the brand in every way - same active ingredient, same strength, same form (like a tablet), and proven to work the same in the body. AB1, AB2, AB3? Those just mean there are multiple brand-name versions out there, and the generic matches one of them specifically.
• BC means extended-release. The drug is designed to release slowly over time. Proving bioequivalence for these is harder, so they get a B - even if they work fine.
• BT is for topical products: creams, gels, patches. These are tricky because the skin absorbs them differently. The FDA can’t always prove they’re the same, so they get a B.
• BN is for aerosol inhalers. The way the drug gets into your lungs matters. If the delivery system isn’t identical, the FDA flags it.
• BX is the red flag. Not enough data. The FDA doesn’t know if it works the same. Don’t substitute.

Here’s the catch: a B rating doesn’t mean the drug is unsafe. It just means the FDA hasn’t confirmed it’s interchangeable. Many B-rated products are perfectly effective - they just haven’t gone through the full testing process required for an A rating.

Why This System Matters for You

You might think this is all paperwork. But it’s not. This system saves billions every year.

Generic drugs make up 90% of prescriptions but only cost 23% of what brand-name drugs do. That’s $370 billion saved annually in the U.S. alone. That money comes from one thing: substitution. If pharmacists can swap a brand-name drug for a cheaper generic with confidence, insurance companies pay less. You pay less. The system works because of those little codes.

Forty-nine states let pharmacists swap A-rated drugs without asking your doctor. That’s automatic. But if the code is B? That’s a different story. In 38 states, pharmacists must notify your doctor before swapping a B-rated drug. In some cases, they can’t swap at all.

What Pharmacists See (And What You Don’t)

A pharmacist checks the Orange Book every time they fill a prescription. They don’t just look at the name. They look at the TE code.

According to a 2022 survey of 1,200 community pharmacists, 87% said the TE code system makes substitution faster and safer. They spend about 2.7 minutes per prescription checking it. That adds up - but it’s worth it. Those minutes prevent errors.

But problems happen. A 2022 American Medical Association survey found that 42% of doctors don’t understand B codes. Some think a B means the drug is bad. Others think it’s just a technicality. One doctor in Ohio told his pharmacist to swap a B-rated asthma inhaler - but the pharmacist refused because they didn’t know the code meant it was potentially equivalent, not unsafe. The patient ended up with a higher co-pay and a delayed refill.

That’s the gap: the system works perfectly for simple pills. But for inhalers, creams, or slow-release capsules? It’s outdated.

Where the System Falls Short

The FDA’s code system was built for tablets and capsules. It’s not designed for complex products.

Think about a topical cream for eczema. Two creams might have the same ingredient, but if one is thicker, or absorbs slower, the patient gets less medicine. The FDA can’t easily measure that in a lab. So they give it a BT code - even if the cream works fine in real life.

Same with inhalers. The device matters as much as the drug. A generic inhaler might deliver the same dose, but if the puff feels different, patients don’t use it right. That’s not bioequivalence - that’s human behavior. The FDA doesn’t test for that.

Between 2018 and 2022, applications for B-rated complex generics rose 22%. The FDA knows this is a problem. In their 2022 draft guidance, they admitted current methods aren’t enough for these products. They’re now working on new ways to test them - using real-world data, not just lab studies.

What’s Changing in 2025?

The FDA’s Office of Generic Drugs has a plan: by 2027, they want to cut B-rated products for complex drugs by 30%. That means more generics will get A ratings - even for tricky products like injectables and inhalers.

They’re also expanding their Product-Specific Guidances - detailed rules for how to test each drug. There are now over 1,850 of these. More guidance means fewer surprises. More A ratings. Fewer B codes.

And they’re starting to look beyond the lab. Real-world evidence - like patient outcomes from electronic health records - might soon help decide if a generic works. That’s a big shift. The FDA is moving from “does it absorb the same?” to “does it help the patient the same?”

What You Should Do

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

• If your pharmacist swaps your brand for a generic, and the pill looks different - that’s normal. As long as the TE code is A, it’s safe.
• If your doctor says “no substitutions,” they might be worried about a B code. Ask them: “Is this because of the TE code?”
• If you’re on a complex drug - like an inhaler, patch, or slow-release pill - and you get a generic, watch how you feel. If something changes (more side effects, less relief), tell your doctor. It might be the drug, or it might be the delivery system.
• Check the Orange Book yourself. It’s free at fda.gov/orangebook. Search your drug. Look for the TE code. You’ll know exactly what you’re getting.

The system isn’t perfect. But it’s the best we have. And it’s working. Millions of people get cheaper, safe generics every day because of these little codes. They’re not just letters on a page. They’re the reason your prescription costs $5 instead of $500.

What Comes Next?

The future of generic substitution isn’t just about more pills. It’s about smarter testing. The FDA is moving toward using real-world data - like how patients actually respond to a drug - to judge equivalence. That could mean fewer B codes for inhalers, creams, and injectables in the next five years.

For now, the system works. It’s not perfect, but it’s transparent, science-based, and saves billions. The next time you get a generic, look at the name. Then look at the TE code. You’re not just getting a cheaper drug. You’re getting a drug that’s been vetted by one of the world’s most rigorous drug safety systems.