Tofacitinib is a potent, selective inhibitor of the Janus kinase (JAK) family of kinases with a high degree of selectivity within the human genome's set of protein kinases. Currently approved formulations for tofacitinib citrate are immediate‐release (IR) tablets, modified‐release (MR) tablets, and IR solution. A once daily MR microsphere formulation was developed for use in pediatric patients. Demonstration of bioequivalence (BE) between the 10 mg once daily (q.d.) MR microsphere formulation and 5 mg twice daily (b.i.d.) IR solution is needed to enable the exposure–response analyses‐based bridging to support regulatory approval. To assess BE between MR microsphere and IR solution, an innovative approach was utilized with physiologically‐based pharmacokinetic (PBPK) virtual BE trials (VBE) in lieu of a clinical BE trial. A PBPK model was developed to characterize the absorption of different formulations of tofacitinib using Simcyp ADAM module. VBE trials were conducted by simulating PK profiles using the verified PBPK model and integrating the clinically observed intrasubject coefficient of variation (ICV) where BE was assessed with a predetermined sample size and prespecified criteria. The VBE trials demonstrated BE between IR solution 5 mg b.i.d. and MR microsphere 10 mg q.d. after a single dose on day 1 and after multiple doses on day 5. This research presents an innovative approach that incorporates clinically observed ICV in PBPK model‐based VBE trials, which could reduce unnecessary drug exposure to healthy volunteers and streamline new formulation development strategies.