Formulation Substitution (or Therapeutic Equivalency)
Definition: As patients and prescription benefit plans seek to lower their healthcare costs, they may substitute a less expensive therapeutically equivalent drug for a more costly drug.
Formulation substitution can include switching from a brand-name drug to a generic drug, switching from one generic drug to another generic drug, or (rather uncommonly) switching from a generic drug to a brand-name drug.
In most states, formulation substitution is allowed and encouraged, provided that the replacement formulation is deemed to be "therapeutically equivalent" to the innovator formulation by the Food and Drug Administration (FDA).
The FDA publishes a list of drug products and equivalents entitled Approved Drug Products with Therapeutic Equivalence Evaluations; this is commonly referred to as the Orange Book.
The FDA's designation of "therapeutic equivalence" indicates that the generic formulation is bioequivalent to the innovator formulation.
This means that drug products are considered to be therapeutic equivalents only if they have identical active ingredients and if they can be expected to have the same clinical effect and safety profile when administered to patients under the conditions specified in the labeling.