TAP Pharmaceuticals v. United States Department of Health and Human Services
United States Court of Appeals for the Fourth Circuit
163 F.3d 199 (1998)
- Written by Mary Phelan D'Isa, JD
Facts
Medicare Part B does not cover most prescription drugs, but it does cover those administered by doctors during office or hospital visits. TAP Pharmaceuticals (plaintiff), the manufacturer of the prostate drug Lupron, challenged South Carolina’s Medicare Part B policy that reimburses doctors the cost of Lupron only at the reimbursement level of the less-expensive Zoladex, a competing prostate cancer drug manufactured by another company. The policy allows recipients to get Lupron and make up the cost difference out their own pockets and will fully reimburse if there are true medical indications. TAP alleged that the state’s policy violated Medicare regulations because it based the reimbursement amount for Lupron on the cost of a different drug and not on the cost of Lupron, the drug used. TAP also alleged that the state’s rationale for the policy, which was based on the state’s conclusion that there is no therapeutic difference between Lupron and Zoladex, was arbitrary and capricious and violated federal regulations prohibiting payment for any item that is not reasonable and necessary. The state argued that the only interest protected by the Medicare Part B program is that of the elderly in receiving affordable medical insurance, and that TAP’s commercial interests are at odds with that goal.
Rule of Law
Issue
Holding and Reasoning (Motz, J.)
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