FDA Therapeutic Equivalency Codes: How Laws Determine If You Can Swap Generic Drugs

When your pharmacist hands you a generic pill instead of the brand-name drug your doctor prescribed, you might not think twice. But behind that simple swap is a complex legal and scientific system designed to make sure you get the same treatment-without paying more. This system is built on FDA therapeutic equivalency codes, and they’re the reason most generic drugs are legally interchangeable with their brand-name counterparts.

What Are FDA Therapeutic Equivalency Codes?

The FDA assigns each multisource prescription drug a code-like AA, AB, or B-that tells pharmacists and doctors whether a generic version can be safely substituted for the brand-name drug. These codes are published monthly in the Approved Drug Products with Therapeutic Equivalence Evaluations, better known as the Orange Book. It’s not just a list-it’s the legal bible for drug substitution in every U.S. state.

These codes aren’t random. They’re based on three strict criteria: the generic drug must contain the same active ingredient, in the same strength and dosage form, and it must prove it works the same way in the body as the original. That’s called bioequivalence. If it passes, the FDA gives it an A rating. If it doesn’t, or if there’s not enough data, it gets a B rating.

The Meaning Behind the Letters: A vs. B Codes

The first letter tells you everything you need to know. An A means the FDA says you can substitute it with confidence. An B means you shouldn’t-unless your doctor specifically says otherwise.

But the second letter adds more detail. For example:

• AA = Immediate-release pills with no bioequivalence issues. These are the most common generics, like generic lisinopril or metformin.
• AB = Products that had initial bioequivalence concerns but later proved they work just as well. These are still considered substitutable.
• BT = Topical products (creams, ointments) with unresolved bioequivalence issues. These are tricky-skin absorption varies a lot between brands.
• BN = Nebulized inhalers. Even if the active ingredient is the same, the device and particle size matter. Substituting these can change how much medicine actually reaches your lungs.
• BX = Not enough data to judge. These aren’t approved for substitution at all.

The FDA doesn’t assign these codes to over-the-counter drugs or single-source brand drugs. Only generics that compete with an approved reference drug get evaluated.

How State Laws Turn FDA Codes Into Legal Rules

The FDA sets the standard, but states make the rules. Every state has pharmacy laws that require pharmacists to follow the Orange Book when substituting drugs. In most cases, if a drug has an A code, substitution is allowed unless the doctor writes "dispense as written" or the patient refuses.

For example:

• In California, Business and Professions Code Section 4073 says substitution is only permitted for drugs with an A rating.
• New York requires pharmacists to check the most current Orange Book before swapping any generic.
• Texas allows substitution for all A-rated drugs but requires the pharmacist to notify the prescriber if the patient refuses a generic.

Some states even require pharmacists to document the substitution or offer counseling. But no state lets pharmacists substitute a B-rated drug unless the prescriber specifically approves it. That’s because the FDA hasn’t confirmed it’s safe to swap.

Why Some Generics Still Have B Codes

You might wonder: if a generic is FDA-approved, why isn’t it automatically substitutable? The answer lies in complexity.

Drugs like inhalers, topical creams, and extended-release capsules are harder to copy exactly. A small change in inactive ingredients, particle size, or release mechanism can change how the drug behaves in your body. For these, proving bioequivalence isn’t as simple as comparing blood levels.

In 2023, about 24% of FDA-approved generic drugs still had B codes. Many of these are newer complex generics-like biosimilars or inhalers-that the FDA is still studying. For example, a generic asthma inhaler might have the same active ingredient as the brand, but if the propellant or nozzle design differs, the dose delivered to the lungs could be lower. That’s why it gets a BN or BT code.

A 2021 study found that only 5.3% of all generic prescriptions involved B-rated drugs. That’s because most prescriptions are for simple pills-where bioequivalence is easy to prove.

How Pharmacists Use the Orange Book Every Day

Pharmacists don’t guess whether a generic can be swapped. They check the Orange Book-either online or through their pharmacy software. The FDA launched a digital version in January 2023, complete with an API that connects directly to electronic health records. That means your pharmacist can see the TE code right when they pull up your prescription.

A 2023 survey found that 89% of independent pharmacists consider the Orange Book essential for daily work. But 42% still struggle with interpreting some B codes, especially for complex delivery systems. One pharmacist in Ohio told me, “I’ll swap a generic antibiotic without hesitation. But for a topical cream with a BT code? I call the doctor. I don’t want to risk the patient’s skin condition getting worse.”

The FDA is working to reduce the number of B codes. Their Complex Generic Drug Initiative has cut review times from 34 months in 2018 to 22 months in 2023. They’ve also published new guidance on how to test complex products, aiming to reclassify more B-rated drugs as A-rated by 2027.

The Real-World Impact: Billions Saved, Safety Maintained

This system isn’t just about rules-it’s about saving money without sacrificing care. Since 1995, FDA therapeutic equivalency codes have helped save over $1.7 trillion in U.S. healthcare costs. In 2022 alone, A-rated generics saved $298 billion.

That’s because most patients get the same clinical results from an A-rated generic as they do from the brand. A 2021 study in the Journal of Generic Medicines found that 94.7% of all generic prescriptions filled in the U.S. were for A-rated drugs.

But here’s the catch: brand-name companies often challenge TE codes. In 2022, the FDA received 1,247 citizen petitions trying to block generic competition, mostly targeting complex drugs with B codes. These delays are why some generics take years to reach the market-even after FDA approval.

What You Should Do

If you’re prescribed a generic drug:

• Ask your pharmacist: “Is this an A-rated generic?”
• If it’s an A-rated drug, you’re getting the same medicine at a lower price.
• If it’s a B-rated drug, ask your doctor: “Is this substitution safe for me?”
• Never assume a generic is interchangeable just because it’s cheaper. Check the code.

Your doctor might not know the TE code, but your pharmacist does. Don’t be afraid to ask. You’re not being difficult-you’re being informed.

What’s Changing in 2025?

The FDA is pushing hard to reclassify more complex drugs as A-rated. Their 2023-2027 Strategic Plan aims to cut B-coded products from 24.3% to under 15% by 2027. That means more inhalers, creams, and extended-release pills will soon be eligible for substitution.

They’re also investing $28.7 million through GDUFA III to develop better testing methods for complex generics. This isn’t just bureaucracy-it’s science catching up with medicine. As more drugs become complex, the system has to evolve.

The bottom line? FDA therapeutic equivalency codes are the quiet backbone of affordable medicine in the U.S. They let you save money without risking your health. And as long as the FDA keeps updating them, you can trust that your generic pill is just as good as the brand.