FDA Finalizes Guidance on Generic Drug TE Codes

FDA has finalized guidance explaining how it evaluates and assigns therapeutic equivalence (TE) codes — the two-letter ratings in the Orange Book that tell a pharmacist, in an instant, whether a generic can stand in for a brand. The final guidance, announced in a Federal Register notice that appeared on public inspection 21 August and is scheduled for publication 24 August, closes out a draft FDA issued more than four years ago, in July 2022. It carries over the draft’s explanation of the coding system largely intact, but adds something the draft did not have: a second path for certain 505(b)(2) applicants to request a code.

The code that runs the pharmacy counter

FDA's therapeutic equivalence evaluations are published for multisource prescription drug products in the active section of the Orange Book — formally, Approved Drug Products With Therapeutic Equivalence Evaluations. The guidance describes them as public information prepared for state health agencies, prescribers, and pharmacists, meant to promote informed drug product selection and to help contain health care costs. In practice, the code is consulted far more often than it is explained: every state has an automatic-substitution law built around it, letting or requiring a pharmacist to dispense a generic in place of the prescribed brand unless directed otherwise, so long as the generic carries the right rating.

The rating itself is a short code with a specific grammar. A first letter of “A” means FDA considers the product therapeutically equivalent to other pharmaceutically equivalent products — no known or suspected bioequivalence problem. A first letter of “B” means the opposite: an actual or potential bioequivalence problem that has not been resolved with adequate evidence, so the product is not to be considered therapeutically equivalent absent further data. Subcodes narrow the picture further. Where more than one brand-name reference product exists for a given drug, FDA appends a number — AB1, AB2, AB3 — so that a generic rated AB1 can be substituted for the AB1 reference but not for a differently numbered one. A BX code marks products where FDA lacks sufficient data to make a determination at all.

What the final guidance adds

The bulk of the final guidance restates the 2022 draft's account of how the coding system works and why it exists. The substantive addition is procedural: the final version lays out an additional process by which applicants of certain 505(b)(2) applications — the hybrid pathway used for products that rely in part on FDA's prior findings about a different but related drug — can request a TE code for their product. Previously, a sponsor or another interested party seeking a rating outside the standard review process was largely limited to the citizen-petition route under FDA's regulations, a mechanism not built for routine, product-specific requests. The new process gives 505(b)(2) applicants a more direct channel to seek a code without going through that petition process.

Why RA/QA teams should read this now

For a generics manufacturer, a TE code is the difference between a product that pharmacies substitute automatically and one that a pharmacist cannot dispense in place of the brand without a prescriber's sign-off — a gap that shows up directly in market share. For a 505(b)(2) sponsor, the new request process changes the calculus on when and how to seek a rating for a product that was never a straightforward generic to begin with. Because the guidance is a Level 1 guidance describing FDA's current thinking, it takes effect on publication; comments can still be submitted to the docket at any time, but sponsors do not need to wait for a comment period to close before the agency's stated approach applies to new evaluations.