AJC Watchdog: First Alert

Keeping watch on those who hold the public trust and money

Northside Hospital to testify, face questions from Congress on its use of drug discounts

A Northside Hospital executive will testify before a congressional subcommittee next week about the Atlanta hospital's use of a lucrative drug discount program.

The U.S. House Energy and Commerce Committee announced on Wednesday that Shannon A. Banna, Northside's director of finance and system controller, would testify about Northside's use of the federal "340B" program. Executives from four other health care organizations will also testify.

Last month, the committee's leadership sent letters to hospitals and other health care providers from across the country, asking for detailed information about their use of the drug discount program. Northside, Grady Memorial Hospital and the Emory Healthcare system were among those who got the congressional letters requesting information. The questions probed how the savings on drugs are used to help patients. The responses to the letters have not been made public.

An Atlanta Journal-Constitution investigation of the 340B program published in June found that Northside Hospital uses the program to get massive discounts on expensive drugs at scores of outpatient sites all over metro Atlanta by using the program. But the hospital is hardly a leader in caring for those who can’t afford to pay. According to cost reports filed with the federal government, charity care consumed just 1.7 percent of Northside’s expenses in 2016, the AJC found.

The AJC's June report also examined how the 340B program is used by Emory Healthcare and Grady Memorial Hospital.

Northside declined to tell the AJC how much it was saving through the program. But the hospital is now being asked by Congress to reveal detailed information. Here's a copy of the letter the committee leaders sent to Northside.

"At next week’s hearing, members will hear directly from entities participating in the program to get a better understanding of how the program is used, including how much money is saved, the types of drugs purchased and prescribed within the program, how entities track their savings, and how those savings are used to improve patient care," according to the hearing announcement.

The 340B program was created in 1992 for charity hospitals that serve lots of low-income patients covered by government health plans. The program initially had hospitals like Atlanta's Grady Memorial in mind. Grady, which welcomes Atlanta's poor and uninsured, has used the program for years to help support its pharmacy program.

At Grady, most patients pay $5 or less for outpatient medications that treat everything from diabetes to cancer. The 340B program helped Grady provide those drugs to its patients through the discounts that saved Grady $29 million last year.

But hospitals enrolled in 340B don't have to pass the discounts they get on drugs to patients or even use savings on charity care programs. They don't even have to say what they used the discounts for. As the program has expanded, questions have remained about how more affluent hospitals, such as Northside,  are using the program.

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About the Author

Carrie Teegardin is on the investigative team. She is a graduate of Duke University and has won numerous national journalism awards.