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

When you pick up a prescription at the pharmacy, you might be handed a pill that looks nothing like the one your doctor prescribed. It’s a different color, maybe a different shape, and it has a different name. But if it’s rated as therapeutically equivalent by the FDA, it’s meant to work the exact same way. This isn’t guesswork. It’s science-carefully coded and tracked in a public database called the Orange Book.

What the Orange Book Actually Does

The FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, better known as the Orange Book, isn’t just a list of approved drugs. It’s the official guide that tells pharmacists and doctors which generic versions can be swapped in for brand-name drugs without changing how well they work or how safe they are. First published in 1980, it became the backbone of the U.S. generic drug system after the Hatch-Waxman Act of 1984. That law made it easier for companies to bring cheaper versions of drugs to market, but only if they could prove they were truly equivalent.

Today, the Orange Book lists over 14,000 approved drug products. About 90% of them-nearly 12,600-have an ‘A’ rating. That means they’re approved for substitution. The rest? They’re flagged with a ‘B’ or other codes, and that’s where things get tricky.

The Letters That Matter: A vs. B Codes

The FDA doesn’t use numbers or complicated jargon. It uses simple letters. The first letter tells you everything you need to know:

• A means the drug is therapeutically equivalent to the brand-name version. You can swap it without hesitation.
• B means the FDA hasn’t confirmed that substitution is safe or effective. It doesn’t mean the drug doesn’t work-it just means there’s not enough data to say it’s interchangeable.

But it’s not that simple. The ‘A’ code has subcategories. You’ll see AB, AB1, AB2, AB3, AB4. These tell you which brand-name drug the generic was compared to. If a drug has two different brand-name versions on the market, the FDA tracks which one each generic was tested against. That’s why AB1 and AB2 exist. If your doctor prescribes a specific brand, your pharmacist needs to match the right AB code to avoid a mismatch.

‘B’ codes are more complex. Here’s what they mean:

• BC = Extended-release forms with bioequivalence questions
• BD = Known bioequivalence problems
• BE = Delayed-release oral products
• BT = Topical products (like creams or gels) with unclear absorption
• BN = Aerosol or nebulizer products
• BP = Potential bioequivalence issues
• BR = Suppositories or enemas meant for systemic effect
• BS = Drug standard problems
• BT = Topical products with bioequivalence issues
• BX = Not enough data to rate

These aren’t random labels. They’re based on real scientific gaps. For example, a cream that looks identical to a brand-name product might not absorb the same way through the skin. Standard blood tests can’t always prove it works the same. So the FDA gives it a BT code-not because it’s dangerous, but because substitution isn’t guaranteed to be safe.

Why This System Exists

The goal isn’t to limit choice. It’s to protect patients. In the 1970s, some generic drugs were approved based on paperwork alone-not real testing. Patients got sick. Some died. The FDA had to step in. The Orange Book system was created to make sure every generic drug meets the same standards as the brand.

It works. Since the system started, there hasn’t been a single documented case of a patient being harmed because they took an FDA-approved generic instead of the brand. That’s a huge win. And it saves money. Generic drugs make up 90% of prescriptions filled in the U.S., but only 23% of total drug spending. That’s over $370 billion saved each year.

But the system wasn’t built for today’s complex drugs. Most of the Orange Book’s ratings were designed for simple pills-immediate-release tablets you swallow. That’s easy to test. You measure how much of the drug enters the bloodstream. Done.

But what about an inhaler? A skin patch? A long-acting injection? These don’t behave like pills. Their effectiveness depends on how the drug is released, how it’s absorbed, even how it’s stored. Standard blood tests don’t capture that. And yet, the FDA still has to rate them. That’s why more ‘B’ codes are showing up-for complex generics. Between 2018 and 2022, applications for these products with ‘B’ ratings jumped 22%.

What Pharmacists and Doctors Really Do

Pharmacists rely on the Orange Book every day. A 2022 survey of 1,200 independent pharmacists found that 87% said TE codes make substitution easier. About 73% check the Orange Book at least once a week. On average, they spend 2.7 minutes per prescription verifying the code. That adds up. But it’s worth it. Those minutes translate to billions in savings.

Doctors, however, aren’t always on the same page. A 2022 AMA survey showed that 42% of physicians are confused by ‘B’ codes. Some think a ‘B’ means the drug is unsafe. Others don’t know what it means at all. That leads to problems. In 28% of cases, pharmacists refused to substitute a ‘B’-rated drug-even when it was clinically appropriate-because they weren’t sure.

And here’s the kicker: 38 states require pharmacists to notify the prescribing doctor if they’re substituting a ‘B’-rated product. That means extra calls, extra paperwork, extra delays. The system works well for simple drugs. For complex ones? It’s a bottleneck.

How the FDA Is Fixing the Gaps

The FDA knows the system has limits. In 2022, they released a draft guidance titled Evaluation of Therapeutic Equivalence-a major update aimed at modernizing how they rate complex products. They’re asking for public input and pushing for better ways to test inhalers, topical creams, and injectables.

One big change? More Product-Specific Guidances (PSGs). These are detailed roadmaps for companies trying to get their generic approved. As of August 2023, the FDA has published 1,850 of them. Each one tells manufacturers exactly what data they need to prove equivalence-for that specific drug. That’s helping more complex generics get ‘A’ ratings.

The FDA’s 2023-2027 plan aims to cut ‘B’-rated complex generics by 30% by 2027. That means fewer confusing codes, fewer delays, and more affordable options for patients.

Looking ahead, experts believe real-world data-like how patients actually respond to these drugs in clinics-will play a bigger role. Right now, the system relies on lab tests. In the future, it might use patient outcomes too.

What You Need to Know

If you’re on a generic drug:

• Check the label. Does it match the TE code in the Orange Book? If it’s an ‘A’, you’re good.
• If you’re switched to a new generic, ask your pharmacist: ‘Is this an AB-rated product?’
• Don’t assume a ‘B’ means the drug doesn’t work. It might. But it hasn’t been proven interchangeable yet.
• If you notice a change in how you feel after switching generics-talk to your doctor. It’s rare, but it happens.

The system isn’t perfect. But it’s the best we have. And it’s getting better. Every year, more generics get approved. More patients get access to affordable medicine. And every time a pharmacist swaps a brand for a generic with an ‘A’ code, someone saves money-and maybe even saves a life.