## Facts

- TAP Pharmaceuticals, Inc. manufactured Lupron, an injectable drug used to treat prostate cancer.
- Medicare Part B covers certain physician-administered drugs furnished incident to a physician’s services, including injectable cancer drugs.
- A South Carolina Medicare carrier implemented a reimbursement policy paying for Lupron only at the lower reimbursement rate applicable to Zoladex, a competing prostate-cancer drug.
- Beneficiaries could still obtain Lupron, but absent physician documentation of specific medical indications for choosing Lupron over Zoladex, patients would bear the difference between Lupron’s cost and the Zoladex-based reimbursement.
- TAP alleged Lupron and Zoladex differed in administration method and adverse reactions, and contended the carrier’s “no therapeutic difference” rationale was flawed.
- TAP claimed the policy reduced physician demand for Lupron, causing decreased sales and revenue.
- TAP sued HHS, the Health Care Financing Administration, and the carrier; the district court dismissed for lack of prudential standing, and TAP appealed.

## Issues

1. Whether a drug manufacturer’s commercial interest in higher Medicare reimbursement for its product falls within the “zone of interests” protected or regulated by Medicare Part B and its implementing regulations, permitting prudential standing to challenge a carrier reimbursement policy.

## Decision

- The Fourth Circuit affirmed dismissal for lack of prudential standing.
- TAP’s asserted injury—lost sales and revenue from reduced reimbursement—was not within the zone of interests of Medicare Part B.
- Medicare Part B’s purpose was construed as protecting beneficiaries and controlling program costs, not protecting manufacturer profitability.
- The regulatory reference to drug pricing metrics for payment calculations did not convert manufacturers into intended enforcers of Medicare reimbursement rules.
- The Medicare scheme’s detailed review rights for beneficiaries and providers, and lack of comparable rights for manufacturers, supported excluding manufacturers from the intended class of challengers.

## Legal Principles

- Prudential standing requires that the plaintiff’s interests be arguably within the zone of interests to be protected or regulated by the statute invoked.
- Medicare Part B is oriented toward beneficiary access to affordable care and cost containment; manufacturer revenue interests are generally outside those protected interests.
- An economic injury traceable to reimbursement decisions may still fail prudential standing when it is indirect, commercially motivated, and not aligned with the statute’s purposes.
- Statutory and regulatory structure—including who is granted administrative appeal rights—may indicate whether Congress intended a plaintiff class to seek judicial review.

## Conclusion

The Fourth Circuit held that a drug manufacturer could not challenge a Medicare Part B reimbursement policy under the zone-of-interests test because the manufacturer’s asserted harm was a commercial interest not protected or regulated by Medicare’s beneficiary-focused statutory scheme.


TAP Pharm. Inc. v. U.S. Dep’t of Health & Hum. Servs., 163 F.3d 199 (4th Cir. 1998)