FDA Therapeutic Equivalency Codes: How Laws Determine Which Generic Drugs Can Be Substituted

When you pick up a prescription, you might not realize that the generic pill in your hand was approved to replace the brand-name version-not because of cost alone, but because of a strict scientific and legal system called Therapeutic Equivalency Codes. These codes, published monthly by the FDA in the Orange Book, are the legal backbone of generic drug substitution in the U.S. They don’t just tell pharmacists which drugs are cheaper-they tell them which ones are legally allowed to be swapped without risking your health.

What Are Therapeutic Equivalency (TE) Codes?

Therapeutic Equivalency Codes are alphanumeric labels assigned by the FDA to prescription drugs that have multiple manufacturers. They answer one simple question: Can this generic drug be swapped for the brand-name version without changing how well it works or how safe it is?

The system was created by the Hatch-Waxman Act of 1984, which aimed to speed up access to affordable generics while protecting patient safety. Since then, the FDA has evaluated over 14,000 drug products using these codes. The first letter is the most important: A means the generic is considered therapeutically equivalent to the brand. B means it’s not. That’s it. No gray area.

For example, if your doctor prescribes Lipitor (atorvastatin), and your pharmacist gives you a generic with an AA or AB code, you’re getting the exact same clinical effect. If the generic has a BC or BT code, the FDA says it’s not yet proven to be interchangeable. That’s not a recommendation-it’s a legal barrier.

How the Code System Works

It’s not just A or B. The second character adds precision. Here’s what the letters mean:

• AA: Immediate-release oral drugs with no bioequivalence issues. These are the easiest to substitute. Think of common pills like metformin or lisinopril.
• AB: Products that initially had questions about bioequivalence but later proved equivalent through additional testing. These are still safe to swap.
• BC: Extended-release tablets or capsules with unresolved bioequivalence concerns. Pharmacists can’t legally substitute these in most states.
• BD: Proven bioequivalence problems. These are rare but do exist-usually because the generic didn’t match the brand’s release pattern.
• BT: Topical products like creams or gels where absorption is hard to measure. Even if the ingredients are the same, the skin may absorb them differently.
• BN: Aerosol or nebulized drugs. These require precise delivery, and small formulation changes can alter lung deposition.
• BX: Not enough data to judge. These are often new generics still under review.

These aren’t guesses. Each code is backed by data from clinical studies, bioequivalence trials, and lab tests. For instance, an AB code might mean the generic had a different filler than the brand, but the FDA confirmed the drug still released into the bloodstream at the same rate and intensity.

Why the Orange Book Is the Law, Not Just a Guide

The FDA doesn’t enforce substitution rules. That’s up to each state. But every state-California, Texas, New York, Florida-uses the Orange Book as their legal reference. In fact, state pharmacy boards require pharmacists to check the current edition before swapping any generic.

Take California: Business and Professions Code Section 4073 says pharmacists can only substitute if the generic has an A rating. If it’s a B, they must dispense the brand unless the doctor writes “Do Not Substitute.” Same in New York. Same in Illinois. Even in states with more lenient substitution laws, the Orange Book is still the starting point.

This isn’t optional. If a pharmacist substitutes a BT topical cream for a brand and the patient has a bad reaction, the pharmacist can be held liable. The FDA’s code isn’t a suggestion-it’s a legal shield.

What Happens When a Drug Gets a B Code?

Most people assume if a drug is FDA-approved, it’s interchangeable. That’s not true. Over 3,400 products in the Orange Book have a B code as of October 2023. That’s nearly a quarter of all listed generics.

These are usually complex drugs: extended-release pills, inhalers, injectables, creams, or patches. For example, a generic version of a long-acting insulin or a transdermal pain patch might have the same active ingredient but a different polymer coating that changes how slowly the drug enters the body. The FDA can’t say for sure that it behaves the same in every patient-so it assigns a B code.

Pharmacists know this. A 2023 survey by the National Community Pharmacists Association found that 68% of pharmacists hesitate to substitute products with BT or BC codes-even if the prescriber doesn’t block it-because they’ve seen cases where patients had unexpected side effects after switching.

Brand-name companies often fight to keep drugs in the B category. In 2022, the FDA received 1,247 citizen petitions challenging TE codes-up 17% from the year before. Most came from brand manufacturers trying to delay generic competition on high-revenue drugs like asthma inhalers or biologic injectables.

How Much Money Is at Stake?

Therapeutic equivalency isn’t just about safety-it’s about cost. In 2022, generic drugs saved the U.S. healthcare system $298 billion. But that’s only for products with A codes. Those made up 97% of all generic prescriptions.

Products with B codes? They’re still approved by the FDA, but they’re rarely substituted. That means patients often pay full brand price for them, even if a cheaper version exists. For drugs like Copaxone (multiple sclerosis) or Advair (asthma), the difference between a B code and an A code can mean hundreds of dollars per month for patients.

The FDA knows this. Their 2023-2027 Strategic Plan aims to reduce the number of B code drugs from 24.3% to under 15% by 2027. They’re investing $28.7 million through GDUFA III to develop better testing methods for complex generics-like using advanced imaging to track how a patch releases drug into the skin.

What You Should Do as a Patient

You don’t need to memorize TE codes. But you should know this: if your pharmacist switches your medication and you notice a change-worse side effects, less relief, different timing-ask why.

Check your prescription label. If the generic name is listed, ask your pharmacist: “Is this an A-rated product?” If they say yes, you’re covered. If they say no, ask if the doctor needs to approve the switch.

Also, don’t assume all generics are equal. Two different generics of the same drug can have different codes. For example, one brand of metformin might be AA, while another is AB. Both are safe. But if your insurance switches you from one to the other, and you feel different, speak up.

Doctors and pharmacists rely on the Orange Book. You can too. The FDA makes it free to access online. If you’re on a chronic medication, it’s worth checking once a year to see if your generic’s code changed.

What’s Changing in 2025?

The FDA is making the Orange Book more useful. Since January 2023, it’s been fully digital with API access for electronic health records. That means your pharmacy’s system can now auto-check TE codes when filling a prescription.

They’re also updating how they test complex drugs. New guidance released in August 2023 says minor changes-like switching from cornstarch to rice starch as a filler-won’t automatically disqualify a drug from an A rating, as long as performance stays the same.

By 2028, experts predict over 93% of generic prescriptions will be for A-rated drugs. That’s progress. But until then, the B code remains a silent barrier-protecting some patients, limiting access for others.

Therapeutic Equivalency Codes are the quiet engine behind America’s generic drug system. They’re not perfect. But they’re the only legal framework we have to ensure that cheaper medicine doesn’t mean worse medicine.

What Comes Next?

The future of generic substitution hinges on solving the challenges of complex drugs. Inhalers, patches, and long-acting injectables are becoming more common-and harder to copy exactly. The FDA’s push to reduce B codes by 2027 isn’t just about cost. It’s about fairness. Patients shouldn’t pay more just because a drug is hard to replicate.

If you’re on a medication with a B code, don’t assume you’re stuck with the brand. Ask your doctor if there’s an A-rated alternative. Ask your pharmacist if a new version has been approved. And if you notice a change in how you feel after a switch-speak up. The system works best when patients are informed.