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

When your pharmacist hands you a generic pill instead of the brand-name version, you might not think twice. But behind that simple swap is a rigorous, science-backed system the FDA uses to decide whether it’s safe to substitute one drug for another. This system? Therapeutic equivalence codes. They’re not just letters on a label-they’re the backbone of how millions of Americans save money on prescriptions every year without sacrificing safety or effectiveness.

What Are Therapeutic Equivalence Codes?

Therapeutic equivalence codes, or TE codes, are a classification system created by the U.S. Food and Drug Administration to tell pharmacists and doctors which generic drugs can be swapped for brand-name drugs without changing how well they work or how safe they are. These codes appear in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, commonly called the Orange Book. First published in 1980, the Orange Book is updated monthly and lists over 14,000 approved drug products.

The core idea is simple: if two drugs are therapeutically equivalent, they should produce the same clinical result in the same patient under the same conditions. That means the same effect on your blood pressure, the same relief from pain, the same reduction in infection. It’s not about cost. It’s about science.

The Letter System: A, B, and What Comes After

TE codes use a simple but powerful letter format. The first letter tells you everything you need to know:

• A means the generic drug is therapeutically equivalent to the brand-name version. You can substitute it without hesitation.
• B means the FDA doesn’t yet have enough evidence to say it’s equivalent. It might be close, but more study is needed.

But it doesn’t stop there. After the first letter, you’ll often see numbers or additional letters that give more detail:

• AB is the most common code. It means the generic has been proven bioequivalent to the brand-name drug through standard tests-usually blood level measurements taken after the drug is taken.
• AB1, AB2, AB3, AB4 show that there are multiple brand-name drugs (called Reference Listed Drugs) for the same generic. For example, if a generic matches Brand A, it gets AB1. If it matches Brand B instead, it gets AB2. Pharmacists need to know which version they’re substituting for.
• BC, BD, BE, BT, BP, BR, BS, BX are all B codes with extra letters to explain why the drug is flagged. For example:

• BC = extended-release formulations with bioequivalence concerns
• BT = topical products like creams or gels where absorption is hard to measure
• BX = not enough data to judge at all

These extra letters matter. A drug with a BT code isn’t necessarily unsafe-it just means the FDA can’t confirm with current testing methods that the cream you’re using will work the same as the brand. That’s why some pharmacists hesitate to swap them without checking with your doctor.

Why Does This System Exist?

The TE code system was created to solve a real problem: how to encourage generic drug use without risking patient safety. Before the 1984 Hatch-Waxman Act, many generic drugs were approved based on little more than chemical similarity. But two pills can look identical and still behave differently in the body.

The FDA’s breakthrough was requiring generic manufacturers to prove bioequivalence-meaning the generic releases the same amount of active ingredient into the bloodstream at the same rate as the brand. That’s done through controlled studies in healthy volunteers. If the results fall within strict limits (usually 80-125% of the brand’s levels), the drug qualifies for an A rating.

This system isn’t just bureaucratic-it’s effective. As of 2023, 90% of all prescription generics in the U.S. carry an A rating. That means for most common pills-like metformin, lisinopril, or atorvastatin-you can trust the generic completely.

How Pharmacists Use TE Codes Every Day

Pharmacists don’t guess whether a generic can be swapped. They check the Orange Book-online or in print-before filling a prescription. According to a 2022 survey of 1,200 community pharmacists, 87% use the Orange Book at least once a week. On average, they spend about 2.7 minutes per prescription verifying the TE code.

That time adds up. But it saves money. In 2023, generic drugs saved the U.S. healthcare system $370 billion. That’s because insurers and government programs like Medicare push for substitutions when TE codes allow it. In 49 states, pharmacists can automatically switch a brand-name drug for an A-rated generic without calling the doctor.

But things get messy with B-rated drugs. A 2022 American Medical Association survey found that 42% of physicians didn’t fully understand what a B code meant. Some thought it meant “unsafe.” Others thought it meant “ineffective.” Neither is true. A B code just means “we need more data.”

That confusion leads to mistakes. In some cases, pharmacists refuse to substitute a B-rated drug-even when the patient and doctor agree it’s fine. In others, pharmacists substitute a B-rated drug thinking it’s safe, when it’s not yet proven equivalent. That’s why 38 states require pharmacists to notify the prescriber before substituting a B-rated product.

Where the System Falls Short

The TE code system works beautifully for simple, immediate-release pills. But it struggles with complex products:

• Topical creams (like tacrolimus ointment): Skin absorption varies by person, making blood tests useless.
• Inhalers (like albuterol): How much drug reaches the lungs depends on how you use the device.
• Injectables (like complex biologics): Manufacturing differences can change how the drug behaves.

These products often get B codes-not because they’re bad, but because the current testing methods can’t prove equivalence. Dr. Duxin Sun from the University of Michigan says, “Current TE codes for topical, inhaled, and complex injectable products may not adequately reflect therapeutic equivalence.”

The FDA admits this. In its 2022 draft guidance, the agency proposed new ways to evaluate these drugs-using in vitro tests, real-world data, and better modeling. The goal? Reduce the number of B-rated complex generics by 30% by 2027.

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 full scientific reviews for each generic. That’s more detailed-but harder for pharmacists to use quickly.

The FDA’s approach is built for speed and clarity. It gives pharmacists a clear green light (A) or yellow light (B). That’s why 90% of U.S. prescriptions are filled with generics, while in the EU, the rate is closer to 50%. The TE code system doesn’t just save money-it makes the system work.

What You Should Do as a Patient

You don’t need to memorize TE codes. But here’s what you should know:

• If your prescription says “dispense as written” or “no substitution,” your doctor is asking for the brand. That’s okay-sometimes it’s necessary.
• If you’re given a generic and it doesn’t seem to work the same, tell your doctor. It’s rare, but it can happen-especially with complex drugs.
• Ask your pharmacist: “Is this generic rated AB?” If yes, you’re good to go.
• If it’s a B-rated drug, ask if there’s an A-rated alternative. If not, ask your doctor if it’s safe to use.

The bottom line? For most common medications, generic substitution is not just safe-it’s the standard. The TE code system makes that possible.

What’s Next for Therapeutic Equivalence?

The FDA isn’t resting. With more complex drugs entering the market-like biosimilars and specialty injectables-the agency is working on new ways to evaluate them. They’re expanding their Product-Specific Guidances to over 1,850 drug products, giving manufacturers clearer rules to get an A rating.

They’re also looking at real-world evidence: data from patient records, pharmacy claims, and even wearable sensors. Could future TE codes include data on how patients actually respond-not just blood levels?

The goal remains the same: safe, affordable, accessible medicine for everyone. And for now, the TE code system is doing exactly that.

Final Thoughts

Therapeutic equivalence codes are one of the most quietly powerful tools in modern medicine. They let you pay less for the same medicine. They help pharmacies run efficiently. They keep the healthcare system from being overwhelmed by drug costs. And they do it all without compromising safety.

The system isn’t perfect. It’s still catching up with complex drugs. But for the vast majority of prescriptions-pills you swallow every day-it works exactly as intended. Trust the AB code. Ask questions about the B code. And know that behind every generic you take, there’s a rigorous, science-driven process making sure you’re getting what you need.