PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

TAP PHARMACEUTICALS,
Plaintiff-Appellant,

v.

U.S. DEPARTMENT OF HEALTH &
                                                                         No. 97-2773
HUMAN SERVICES; HEALTH CARE
FINANCING ADMINISTRATION;
PALMETTO GOVERNMENT BENEFITS
ADMINISTRATORS,
Defendants-Appellees.

Appeal from the United States District Court
for the District of South Carolina, at Columbia.
Dennis W. Shedd, District Judge.
(CA-97-969-3-19)

Argued: September 22, 1998

Decided: November 30, 1998

Before MURNAGHAN, WILLIAMS, and MOTZ, Circuit Judges.

_________________________________________________________________

Affirmed by published opinion. Judge Motz wrote the opinion, in
which Judge Murnaghan joined. Judge Williams wrote an opinion
concurring in part and concurring in the judgment.

_________________________________________________________________

COUNSEL

ARGUED: Craig A. Hoover, HOGAN & HARTSON, L.L.P., Wash-
ington, D.C., for Appellant. Maria Simon, Appellate Staff, Civil Divi-
sion, UNITED STATES DEPARTMENT OF JUSTICE, Washington,
D.C., for Appellees. ON BRIEF: David G. Leitch, Adam Braff,
HOGAN & HARTSON, L.L.P., Washington, D.C., for Appellant.
Frank W. Hunger, Assistant Attorney General, J. Rene Josey, United
States Attorney, Scott R. McIntosh, Appellate Staff, Civil Division,
UNITED STATES DEPARTMENT OF JUSTICE, Washington,
D.C., for Appellees.

_________________________________________________________________

OPINION

DIANA GRIBBON MOTZ, Circuit Judge:

TAP Pharmaceuticals, Inc. (TAP), appeals from the dismissal of its
complaint for lack of standing. TAP seeks to challenge a Medicare
reimbursement policy. That policy reduces the amount of reimburse-
ment paid for Lupron, a prostate cancer drug manufactured by TAP,
to the amount paid for Zoladex, a competing prostate cancer drug
made by another drug company. The district court concluded that the
interests asserted by TAP in this action do not fall within the "zone
of interests" protected by the Medicare Part B program, and that
therefore TAP lacked standing to sue. Although we rely on reasons
somewhat different than those set forth by the district court, we reach
the same conclusion. Accordingly, we affirm.

I.

Lupron and Zoladex treat prostate cancer by means of the same
basic chemical mechanism, and they achieve the same level of effec-
tiveness. The two drugs have different rates of action, however, and
their particular chemical formulations implicate different adverse
reactions.

Lupron is administered in liquid form by an intramuscular injection
with a 22-gauge needle, while Zoladex is administered as a pellet
injected under the skin with a larger, 14- or 16-gauge needle. The
larger needle used in administering Zoladex may occasionally cause
complications, such as keloid scarring or bleeding hematoma, which
are less likely to occur with a Lupron injection. The manufacturer of

                    2
Zoladex suggests that, at the option of the physician or the patient, a
local anesthetic and bandage be used in administering the drug. Such
procedures are unnecessary with Lupron. Some doctors prefer Lupron
to Zoladex because of its less invasive means of administration.

Many patients who receive Lupron or Zoladex have a portion of
their health care costs covered by Medicare Part B, a federal program
that provides supplementary medical insurance to the elderly. 42
U.S.C.A. §§ 1395j-1395ccc (West 1992 & Supp. 1998). Generally,
Medicare Part B covers "reasonable and necessary" medical services
for the "diagnosis or treatment of illness or injury or to improve the
functioning of a malformed body member." Id. §§ 1395k,
1395y(a)(1)(A). Though Medicare Part B does not cover most pre-
scription medication, it does cover drugs, like Lupron and Zoladex,
which are typically administered by doctors during office or hospital
visits. Id. § 1395x(s)(2)(A). Medicare reimburses doctors for a per-
centage of the cost of such drugs. Id. §§ 1395k, 1395l, 1395u(o)(1);
42 C.F.R. § 405.517(b) (1998).

In October 1996, Palmetto Government Benefits Administrators
(Palmetto), which administers Medicare Part B benefits in South Car-
olina under the authority of the Health Care Financing Administration
and the United States Department of Health and Human Services (col-
lectively, the Government), adopted the policy that TAP seeks to
challenge here. The policy provides that doctors will be reimbursed
for the cost of Lupron only at the reimbursement level of the less-
expensive Zoladex. Prior to its adoption, Palmetto reimbursed expen-
ditures for each drug on the basis of that drug's own cost.

Palmetto based this change in policy on its conclusion that "there
is no therapeutic difference between" the two drugs, although it later
acknowledged that TAP's Lupron has a greater duration of action. In
the most recent version of the Lupron policy, Palmetto states that
"there is no demonstrable difference in clinical efficacy" between
Lupron and Zoladex. This latest version of the policy also loosens the
restriction on Lupron reimbursement. It allows patients who wish to
receive Lupron to make up the difference in cost between Lupron and
Zoladex on their own, and it provides that "[i]f there are true medical
indications requiring the use of [Lupron] instead of [Zoladex], Medi-
care will consider reimbursement for the difference in cost if an

                    3
invoice and documentation of the medical necessity accompanies the
claim."

Palmetto maintains that the Medicare Carriers Manual authorized
it to adopt the new Lupron policy. One provision of the Manual
instructs carriers to pay for durable medical equipment (DME) at a
level based on the least costly alternative where"medically appropri-
ate and realistically feasible alternative pattern[s] of care" are avail-
able. Compl. at 5 (quoting Manual § 2100.2(B)). Another provision
of the Manual states that carriers have "discretion" to apply the least
costly alternative principle "to payment for non-DME items and ser-
vices as well." See id. (quoting Manual§ 7505.1).

TAP alleges that the new Lupron reimbursement policy violates a
Medicare regulation providing that reimbursement for drugs such as
Lupron must be "based on the lower of the estimated acquisition cost
or the national wholesale average price of the drug." 42 C.F.R.
§ 405.517(b). TAP asserts that basing reimbursement for Lupron on
the cost of Zoladex, rather than on the cost of Lupron itself, violates
this regulation. Although the regulation has now been superseded by
a 1997 amendment to the Act, which provides that payment for cov-
ered drugs is to be made at 95% of the average wholesale price, 42
U.S.C. § 1395(o)(1), TAP's contention regarding the regulation
applies equally well to the statute as amended. 1 Both base reimburse-
ment on the cost of the drug used, while the new Lupron policy bases
reimbursement on the cost of another drug.
_________________________________________________________________
1 Prior to the 1997 amendments, the statutory provisions governing
reimbursement for medication also indicated, albeit less clearly than the
regulation relied on by TAP, that reimbursement was to be based on the
cost of the drug actually provided. Section 1395l(a), the section that
determines the amount of benefits in most cases, provides for payment
of a percentage of the cost of "the services," which clearly means the ser-
vices actually provided to the beneficiary. 42 U.S.C.A. § 1395l(a) (West
1992). Drugs like Lupron and Zoladex come within the definition of
"medical and other health services," id. § 1395x(s)(2), and therefore the
benefit amount provisions of section 1395l would apparently have
applied to them prior to the 1997 amendments. Since those amendments
came into effect, however, the more specific language of section
1395u(o)(1) has controlled reimbursement for drugs, as noted in the text.

                     4
TAP also alleges that Palmetto adopted its Lupron policy without
the notice and comment required by statute, see 5 U.S.C.A. § 553
(West 1996); 42 U.S.C.A. § 1395hh(a)(2),(b) (West 1996); that Pal-
metto's conclusion that "there is no therapeutic difference between"
Lupron and Zoladex lacked a scientific basis and so its adoption of
the new Lupron policy in reliance upon this conclusion was arbitrary
and capricious, see 5 U.S.C.A. § 706(2); and finally that Palmetto's
reimbursement policy violated 42 U.S.C.A. § 1395y(a)(1)(A), which
prohibits payment for any item that is not "reasonable and necessary."

Without confronting the merits of these allegations, the Govern-
ment moved to dismiss TAP's complaint on three grounds. The Gov-
ernment argued (1) that TAP's complaint did not meet prudential
standing requirements; (2) that Medicare Part B statutorily precluded
TAP's complaint; and (3) that TAP lacked Article III standing. The
district court dismissed TAP's complaint based solely on the first of
these contentions, finding that the company did not satisfy the pru-
dential standing requirements and therefore had no right to challenge
the Lupron policy in court. In light of our resolution of this appeal,
we too need only address the first issue.

II.

The Administrative Procedure Act (APA) provides that"[a] person
suffering legal wrong, or adversely affected or aggrieved by agency
action within the meaning of a relevant statute, is entitled to judicial
review thereof." 5 U.S.C.A. § 702 (West 1996). The Supreme Court,
however, has concluded that the APA in fact provides more limited
rights than the statutory language might suggest. In accordance with
its prudential standing rules, the Court has held that the APA permits
a party to challenge agency action in court only if"the interest sought
to be protected by the complainant is arguably within the zone of
interests to be protected or regulated by the statute . . . in question."
Association of Data Processing Serv. Orgs. v. Camp, 397 U.S. 150,
153 (1970) (interpreting 5 U.S.C. § 702).

For a number of years the Supreme Court did not further explain
how this "zone of interests" test was to be applied. In the interim, we
and other courts concluded that "the zone test rests on the need to
secure the benefits of a statutory program for the groups that Con-

                     5
gress intended to benefit." Leaf Tobacco Exporters Ass'n v. Block,
749 F.2d 1106, 1111 (4th Cir. 1984) (emphasis added); see also
Moses v. Banco Mortgage Co., 778 F.2d 267, 270 (5th Cir. 1985)
("[a] party will fall within the zone of interests if he is a member of
a class of persons who was intended to be benefited by the statute or
regulation"); Alschuler v. Department of Housing and Urban
Development, 686 F.2d 472, 480 (7th Cir. 1982) (denying standing to
nonresidents where relevant statutory provision was"designed solely
for the protection of residents"); Constructores Civiles de Cen-
troamerica v. Hannah, 459 F.2d 1183, 1189 (D.C. Cir. 1972) ("the
challenging party need only show that it is an intended beneficiary of
the statute not necessarily the primary one").

Thus, we held in Leaf Tobacco that a tobacco exporters association
did not assert an interest within the zone that Congress intended to
protect in the Commodity Credit Corporation Charter Act, 15
U.S.C.A. §§ 714, 714c (West 1997), and that it therefore lacked
standing to challenge the statute. Leaf Tobacco , 749 F.2d at 1114-15.
Although we recognized that a provision of the statute arguably pro-
tected the association's asserted interests, we nonetheless denied the
association standing because the statute "explicitly serve[d] the inter-
ests of identifiable groups," and the association was not among those
groups. Id. at 1115. We explained that "[w]here Congress has . . .
clearly defined the class to be protected, the zone test works to pre-
vent groups outside of the class from usurping the legislative entitle-
ment." Id. For similar reasons, a few years later, we held that
commercial banks lacked prudential standing to challenge a provision
in the Federal Credit Union Act because that statute's common bond
provision "was designed" to further the interests of credit unions, and
"[t]here [wa]s no evidence . . . that Congress also intended by this
provision to protect the competitive interests of banks." Branch Bank
and Trust Co. v. National Credit Union Admin. Bd. , 786 F.2d 621,
626 (4th Cir. 1986).

The district court relied on Leaf Tobacco and Branch Bank to hold
that TAP lacked prudential standing here. TAP points out that after
we issued those rulings, the Supreme Court clarified the zone of inter-
ests test by stating that courts, in applying the test, should "not inquire
whether there has been a congressional intent to benefit the would-be
plaintiff." National Credit Union Admin.[NCUA] v. First Nat'l Bank

                     6
& Trust Co., 118 S. Ct. 927, 933 (1998); see also Clarke v. Securities
Indus. Ass'n, 479 U.S. 388, 399-400 (1987) (the zone of interests test
"is not meant to be especially demanding; in particular, there need be
no indication of congressional purpose to benefit the would-be plain-
tiff"). Indeed, the Supreme Court applied its broader conception of the
zone of interests test in NCUA to hold that the competitive interests
of banks come within the zone of interests protected by the common
bond provision of the Federal Credit Union Act, overruling our hold-
ing in Branch Bank. NCUA, 118 S. Ct. at 932 n.1 (noting that Branch
Bank conflicted with the lower court's opinion in NCUA, which the
Court went on to affirm).

In view of these intervening developments in the law, TAP main-
tains that the district court erred in holding that TAP did not assert
interests within the zone protected by Medicare Part B.

The Supreme Court in NCUA and Clarke did significantly broaden
what we had understood to be the proper reach of the zone of interests
test. But the Court did "not eviscerat[e] the test." NCUA, 118 S. Ct.
at 936 n.7 (internal quotation marks omitted). Rather, it expressly
reaffirmed its validity, explaining that when, as here, "the plaintiff is
not itself the subject of the contested regulatory action, the test denies
a right of review if the plaintiff's interests are so marginally related
to or inconsistent with the purposes implicit in the statute that it can-
not reasonably be assumed that Congress intended to permit the suit."
Clarke, 479 U.S. at 399; see also NCUA, 118 S. Ct. at 934 (citing
Clarke). Hence, standing will be denied to parties who are "merely
incidental beneficiaries" of a statute. NCUA , 118 S. Ct. at 936 n.7.
The NCUA Court described the zone of interests test as a two-part
inquiry:

          in applying the "zone of interests" test, we do not ask
          whether, in enacting the statutory provision at issue, Con-
          gress specifically intended to benefit the plaintiff. Instead,
          we first discern the interests "arguably . . . to be protected"
          by the statutory provision at issue; we then inquire whether
          the plaintiff's interests affected by the agency action in
          question are among them.

Id. at 935. In the instant case, therefore, we must initially determine
what interests the Medicare Part B program "arguably" protects. We

                     7
must then ask whether the interests of TAP that allegedly have been
affected by the challenged agency action--i.e., the Lupron policy--
are among the interests arguably protected by Medicare Part B.

III.

A.

The Government maintains that the only interest arguably protected
by the Medicare Part B program is the interest "of the elderly in
receiving affordable medical insurance," and that TAP's commercial
interests are at odds with this statutory goal. Brief of Appellees at 20.
In support of this position, the Government cites the statute's provi-
sion of insurance for the cost of "reasonable and necessary" medical
care. 42 U.S.C.A. § 1395y(a)(1)(A). The Government argues that this
statutory language shows Congress's sole intention in enacting this
legislation to have been that of protecting the financial integrity of the
Medicare program.

TAP contends that the most important interest protected by the
Medicare Part B program is the provision of excellent medical care
to the elderly. It accordingly denies that the "reasonable and neces-
sary" language in the statute involves a cost limitation, as the Govern-
ment has argued; instead, TAP maintains that the phrase has long
been interpreted by the Government itself to mean merely "safe and
effective." Brief of Appellant at 5; see Estate of Aitken v. Shalala, 986
F. Supp. 57, 59 (D. Mass. 1997). TAP also argues that the Govern-
ment's failed attempts to promulgate a regulation introducing a cost-
based limitation show that the existing regulatory scheme has no such
limitation. Brief of Appellant at 6-7 (citing 54 Fed. Reg. 4302 (Jan.
30, 1989)). TAP heavily relies on a phrase in the legislative history
stating that Medicare Part B seeks "to make the best of modern medi-
cine more readily available to the aged." S. Rep. No. 89-404 (1965),
reprinted in 1965 U.S.C.A.N.N. 1965. TAP contends that its commer-
cial interests in selling as much Lupron as possible coincide with this
statutory goal.

Both parties provide a distorted picture of the interests "arguably
protected" by Medicare Part B. Their conflicting positions suggest
what our examination of the statute, the regulations, and the legisla-

                     8
tive history leads us to conclude: Medicare Part B, like many statutes,
embodies a compromise between ideals of achievement and economic
feasibility that puts its basic purposes in tension. The Act seeks to
"make the best of modern medicine more readily available to the
aged," but it tries to do so by covering only"reasonable and neces-
sary" care in a manner that will ensure the financial integrity of the
system. Perhaps the clearest indication of the statute's competing
goals appears in its provision establishing that health care services
will generally be covered at a statutorily-defined percentage of their
cost. 42 U.S.C.A. § 1395l (West 1992 & Supp. 1998). Through this
provision, the Act makes all levels of reasonable and necessary medi-
cal care more readily available to the aged, while at the same time dis-
couraging excessive expenditure by requiring beneficiaries to pay for
a proportionate share of the cost of the services they use.

To have standing, however, TAP need not assert an interest that
coincides precisely with the balance struck by Congress between the
Act's conflicting purposes; rather, it need only show that its "interests
affected by the agency action" are "among" those that Congress argu-
ably sought to protect. NCUA, 118 S. Ct. at 935.

Considering only the statute's interest in providing high-quality
medical care does not lead to a resolution favorable to TAP, however.
Contrary to TAP's assertions, the interest that it asserts here is not the
same as the statute's interest in making the best of medicine more
readily available to the aged. TAP seeks to increase distribution of
Lupron, but it does not specifically allege that Lupron is the best of
medicine, and it has not otherwise definitively contended that
LUPRON is "better" than Zoladex.

Even if we regard TAP's more general allegations as asserting the
superiority of Lupron, the statute's interest in"mak[ing] the best of
modern medicine more readily available to the aged" would not coin-
cide with TAP's interest. Quotation of the entire sentence in which
this much-cited fragment of legislative history occurs makes the dif-
ference plain: "The provision of insurance against the covered costs
would encourage the participating institutions, agencies, and individu-
als to make the best of modern medicine more readily available to the
aged." S. Rep. No. 89-404 (1965), reprinted in 1965 U.S.C.A.N.N.
1965. This statement expresses an expectation that, as a result of the

                     9
coverage of health care costs under Medicare Part B, hospitals, health
care agencies, and doctors will become less reluctant to provide high-
quality medical care to elderly patients. Medicare Part B is here envi-
sioned as a means of rectifying a situation in which health care pro-
viders denied first-rate services to the aged because they lacked
insurance. The main import of the statement, then, is that the statute
seeks to make the best of medicine "more readily available" than it
would be in the absence of Medicare Part B. The Lupron policy
achieves this statutory purpose: Lupron is still covered, reimburse-
ment for a portion of its cost is still provided, and Lupron is thus
made more readily available to the aged than it would be in the
absence of Medicare Part B. TAP's interest in attacking the Lupron
policy must therefore be in something other than making the best of
medicine more available in the sense articulated in the legislative his-
tory.

TAP actually seeks not to make Lupron "more readily available"
than it would be without Medicare Part B, but rather to make it more
available than it is now, under the Lupron policy. In this sense, TAP's
asserted claim strives for something very different than that which the
legislative history identifies as a statutory goal. Moreover, TAP
objects to the present reimbursement policy not because it fails to
make Lupron more available, but because it fails to make Lupron
available on the same basis as Zoladex. The legislative history stating
that the statute seeks "to make the best of modern medicine more
readily available to the aged," however, cannot be read to express an
interest in making different treatments for the same condition avail-
able on the same basis. The interest of TAP that is"affected by the
agency action in question," therefore, does not coincide with the stat-
ute's interest in making the best of medicine more available to Medi-
care recipients.2
_________________________________________________________________
2 We recognize that in so holding we are rejecting the position taken in
Ioptex Research v. Sullivan, 1990 WL 284512 (C.D. Cal. Dec. 10, 1990),
upon which TAP heavily relies. In this unpublished opinion the court
held that a manufacturer of intraocular lenses had standing to challenge
a Medicare reimbursement policy that reduced the availability of its
product. Id. at *2. The court based this ruling on its conclusion that "Iop-
tex's interest in gaining wider distribution of its[lenses] is not inconsis-
tent with or only marginally related to the Medicare Act's purpose of

                    10
B.

Although TAP addresses the point only in passing, its basic claim
raises another interest that could be among those"arguably protected"
by Medicare Part B. This is TAP's interest in enforcing the regulatory
and statutory provisions that require reimbursement for a drug to be
based not on the cost of a competing drug, as in the Lupron policy,
but rather on the cost of the drug itself. See 42 U.S.C. § 1395u(o)(1);
42 U.S.C. § 1395l; 42 C.F.R. § 405.517(b).

The Supreme Court's decision in NCUA could be read to suggest
that the bare assertion of such an interest would be enough to over-
come prudential limitations on standing. There the Court held that
banks challenging an agency policy that allegedly violated the "com-
mon bond" provision of the Federal Credit Union Act satisfied the
zone of interests test. NCUA, 118 S. Ct. at 936-38. The Court reached
this conclusion even though nothing other than the common bond pro-
vision itself indicated a congressional concern for banks, their com-
petitive interests, or competition in general. Id. TAP has alleged that
the Lupron policy violated the Medicare Act to its detriment, and so
its claim would survive under this interpretation of the zone of inter-
ests test.

This broad interpretation of the rule in NCUA was advanced, how-
ever, by the dissent in that case; the majority expressly rejected it,
stating that its own formulation of the zone of interests test could not
"be read to imply that in order to have standing under the APA, a
plaintiff must merely have an interest in enforcing the statute in ques-
tion." 118 S. Ct. at 936 n.7. As an indication of the difference
between this rejected version of the test and the holding of NCUA, the
Court noted that the plaintiff banks were "more than merely incidental
_________________________________________________________________

making the best of medicine available to the elderly." Id. We believe, for
the reasons set forth in text, that this constitutes a misunderstanding of
the legislative history of Medicare Part B. That history does not articulate
a congressional purpose to make "the best of medicine readily available
to the elderly"; rather, it states an expectation that the statute will make
the best of medicine more readily available than it would be if Medicare
Part B did not exist.

                    11
beneficiaries of [the common bond provision's] effects on competi-
tion." Id. This "incidental beneficiary" concept reiterates the principle,
articulated in Clarke, that the zone of interests test "denies a right of
review if the plaintiff's interests are so marginally related to or incon-
sistent with the purposes implicit in the statute that it cannot reason-
ably be assumed the Congress intended to permit the suit." Clarke,
479 U.S. at 399. Neither NCUA nor Clarke suggests, however, that
when a party is more than merely an incidental beneficiary of the stat-
ute, it necessarily satisfies the zone of interest test. Still the concept
is important because both cases do indicate that a party who is merely
an incidental beneficiary cannot meet the test. Thus if TAP is merely
an incidental beneficiary of the statute, it fails to satisfy the relevant
prudential standing requirements no matter how acutely it desires to
enforce the statute's provisions.

Drug companies like TAP certainly do not constitute direct benefi-
ciaries of the Medicare Part B program. But NCUA indicates that they
do qualify as something more than merely incidental beneficiaries. A
statute that strives to make medical care more available to the elderly
directly implicates the interests of drug companies by expanding their
markets, just as (albeit conversely) the statute promoting the growth
of credit unions in NCUA directly implicated the interests of compet-
ing financial institutions by working, in effect, to contract their mar-
kets.

The Supreme Court's decision in Lujan v. National Wildlife Fed'n,
497 U.S. 871 (1990), provides another indication that TAP is more
than merely an incidental beneficiary. The Court there used a hypo-
thetical to define the limits of standing under the APA:

          for example, the failure of an agency to comply with a statu-
          tory provision requiring "on the record" hearings would
          assuredly have an adverse effect upon the company that has
          the contract to record and transcribe the agency's proceed-
          ings; but since the provision was obviously enacted to pro-
          tect the interests of the parties to the proceedings and not
          those of the reporters, that company would not be"ad-
          versely affected within the meaning" of the statute.

Id. at 883 (quoting 5 U.S.C. § 702). TAP persuasively asserts that
"[i]n contrast to the purely procedural and incidental involvement of

                     12
[the] transcribers' interest in the Lujan example, the manufacturers of
cancer drugs are a substantive and essential part of the system that"
makes the best of medicine more available to the aged. Brief of
Appellant at 16. In terms similar to those in the Lujan example,
TAP's claim would be roughly equivalent to that of a case reporting
company seeking to enforce a provision of a statute that was enacted
for the principal purpose of encouraging courts to publish their deci-
sions, and that operated by reimbursing courts for the costs of publi-
cation. In the same way that one of the principal purposes of
Medicare Part B--to make medical care more available to the aged--
directly implicates the interests of drug companies like TAP, the main
purpose of the case publication statute directly implicates the interests
of case reporting companies. The statutory provision in the Lujan
example, by contrast, was presumably enacted as part of a statutory
scheme that had a principal purpose other than that of holding hear-
ings on the record, and so the reporting company's interest there
could fairly be described as incidental or "marginally related" to that
purpose. Compared to the plaintiff in the Lujan example, then, TAP
does not appear to be merely an incidental beneficiary.

As noted above, however, a determination that TAP is not merely
an incidental beneficiary does not mean that it necessarily passes the
zone of interests test. It only means that TAP's claim cannot be
rejected on this basis. Other than the "incidental beneficiary" stan-
dard, which has proved inconclusive here, NCUA set forth no specific
guidelines for evaluating cases, like this one, where a party's claim
to standing rests solely on an asserted interest in the enforcement of
a statutory provision. But, the entire thrust of the NCUA holding reit-
erates the validity of a zone of interests test that requires something
more than Article III standing. Accepting an interpretation of the test
broad enough to accommodate TAP's claim to standing here would
make discernment of this additional element almost impossible.

In these circumstances, we do best to hew closely to the particulars
of Supreme Court precedent in determining the limits of the zone of
interests test. The NCUA holding resulted only in a finding that com-
mercial competitors of the entities directly regulated by the statute
satisfy the zone of interests test. Although the NCUA Court did not
expressly limit its rationale to competitors, it did rely almost entirely
on cases in which competitors were found to have standing. See

                     13
Clarke, 479 U.S. at 403; Investment Co. Inst. v. Camp, 401 U.S. 617,
621 (1971); Arnold Tours, Inc. v. Camp, 400 U.S. 45, 46 (1970) (per
curiam); Data Processing, 397 U.S. at 157.

Furthermore, the NCUA Court's discussion of Air Courier Confer-
ence v. American Postal Workers Union, 498 U.S. 517 (1991) -- the
only case not dealing with competitors that it explicitly addressed --
also turned in part on the issue of competition. NCUA, 118 S. Ct. at
938 (citing Air Courier, 498 U.S. at 528 n.5). In Air Courier, postal
workers challenged a Postal Service regulation suspending the Ser-
vice's monopoly over some international operations. 498 U.S. at 519-
21. The postal workers claimed that the regulation violated the APA
and the postal monopoly statutes in a manner that adversely affected
their interests in maximizing employment opportunities. Id. at 521.
The Court ruled that the workers did not come within the zone of
interests that the monopoly statutes sought to protect. Id. at 519, 530.
The Court in NCUA distinguished its own ruling from that in Air
Courier by referring to the Air Courier Court's mention of competi-
tive interests: "We further noted [in Air Courier] that although the
statute in question regulated competition, the interests of the plaintiff
employees had nothing to do with competition." NCUA, 118 S. Ct. at
938 (citing Air Courier, 498 U.S. at 528 n.5).

The Court's discussion of its prior zone of interests cases in NCUA
thus suggests that a party who is not expressly subject to a statute's
provisions can only pass the zone of interests test if it asserts the
interests of a competitor of the subject class. Data Processing sup-
ports this approach. The Court there granted the competitor plaintiffs
standing based in part on the rationale that "those whose interests are
directly affected by a broad or narrow interpretation of the Acts are
easily identifiable." 397 U.S. at 157. When, as here, a statute concerns
a specified class, those whose interests are most directly affected by
a broad or narrow interpretation of the statute are even more easily
identifiable. As Data Processing and its progeny suggest, they are the
parties expressly subject to the statute and the commercial competi-
tors of such parties.

The Supreme Court rulings providing commercial competitors with
standing reflect the principle that when Congress passes a statute reg-
ulating a defined class, its intention to limit the class must be given

                     14
the same respect as its intention to regulate it. Defined limits on the
scope of a statute express a congressional purpose to regulate so far,
and no farther. Where, as in the instant case, commercial interests are
concerned, this legislative restraint can be presumed to indicate a
Congressional intention to protect the interests of the competitors of
the parties regulated from encroachment beyond that caused by the
statute's terms. Such a presumption can safely be made because, in
the commercial sphere, benefit or detriment to one party can be fairly
assumed to have the opposite effect on the interests of the party's
competitors. We therefore hold that where a statute defines a group
that is subject to its provisions, a party asserting commercial interests
satisfies the zone of interests test only if its interests put it in the same
position as a member of the subject group or a commercial competitor
of such a member.3

We do not believe that this approach falls afoul of NCUA's rule
that a court should "not ask whether, in enacting the statutory provi-
sion at issue, Congress specifically intended to benefit the plaintiff."
118 S. Ct. at 935. The context of that statement shows that the
Supreme Court sought only to prohibit an automatic denial of stand-
ing in cases where no positive evidence of a congressional intent to
benefit the plaintiff can be found. An approach that provides standing
to parties based on their assertion of commercially competitive inter-
ests presents no conflict with this principle. Furthermore, our
approach relies not on the identity of the party but on the nature of
the interest that it asserts, as the terms of the zone of interests test
have always required. Data Processing, 397 U.S. at 153.

When we apply this analysis to the case at hand, it becomes clear
that TAP does not satisfy the zone of interests test. TAP seeks to
lower the cost of Lupron to beneficiaries of Medicare Part B, and
_________________________________________________________________
3 We recognize that those asserting noncommercial interests present a
different question. The Court in Data Processing made it clear that aes-
thetic, conservational, recreational, and other noneconomic values can
come within a statute's zone of interests. Data Processing, 397 U.S. at
153-54. Such interests do not readily lend themselves to characterization
as competitive or noncompetitive. Thus the analysis set forth in the text
would likely be of little use in determining if those asserting noncom-
mercial interests fall within a statute's zone of interests.

                      15
thereby to regain the market share that it allegedly lost because of the
Government's Lupron policy. The interest that TAP asserts here is
thus clearly a commercial interest, but it is not an interest that puts
it in the position of either a party expressly subject to the Act or a
competitor of such a party.

The parties expressly subject to the Act are beneficiaries and their
assigns, see 42 C.F.R. § 424.55, whose statutorily-protected interests
are in the direct receipt and provision of "reasonable and necessary"
medical services, 42 U.S.C.A. 1395y(a)(1)(A). TAP obviously does
not receive medical services. The company is manifestly interested in
the provision of Lupron to patients, but it does not directly provide
the drug to patients. Thus, TAP's interests differ from those who
receive or directly provide medical services pursuant to Medicare Part
B.

Furthermore, as the Government notes, TAP does not assert an
interest in providing "reasonable and necessary" medical services;
rather it asserts an interest in increasing sales of Lupron. The com-
mercial character of TAP's interest in the sale of Lupron does not, of
course, impair its claim to standing. NCUA, 118 S. Ct. at 938. The
difference between TAP's commercial interest and the interests of the
parties expressly subject to the Act, however, does.

Finally, TAP's asserted interest here also fails to identify it as a
commercial competitor of a party who is subject to the statute. TAP
competes with the manufacturer of Zoladex, not with Medicare Part
B beneficiaries. Moreover, although the medical professionals who
prescribe and provide medication under Medicare Part B do affect
TAP's revenues, they do not compete with TAP in the wholesale drug
market.

We, therefore, hold that TAP does not come within the zone of
interests that Medicare Part B was designed to protect. The order of
the district court granting the Government's motion to dismiss TAP's
complaint is accordingly

AFFIRMED

                     16
WILLIAMS, Circuit Judge, concurring in part and concurring in the
judgment:

I concur in Parts I, II, III.A and in the judgment. With respect,
however, I cannot concur in Part III.B.

The discussion contained in Part III.B is premised on TAP's argu-
ment that it was within the zone of interests of Medicare Part B
merely because it had an interest in enforcing the provisions of the
statutory and regulatory scheme. In my view, that argument was not
fully briefed and argued before the court and therefore was not prop-
erly raised. See Canady v. Crestar Mortgage Corp., 109 F.3d 969,
973 (4th Cir. 1997). As a result, I conclude that the discussion con-
tained in Part III.B is unnecessary.

                     17
