Alberta Recovers $49 Million in Unfulfilled Drug Contract, Legal Action Ongoing
Alberta Health Services (AHS) is taking legal action to recover $49 million paid to an importer and a Turkish pharmaceutical company for medications that were never received, Premier Danielle Smith announced on Wednesday. The failed deal, initially struck in 2022 during a nationwide medication shortage, has prompted investigations by both the RCMP and the provincial auditor general.
Initial Deal and Subsequent Issues
The initial agreement involved the purchase of five million bottles of children’s painkillers. While some medication did arrive through the first iteration of the deal, a subsequent arrangement for further supply ran into significant hurdles. Health Canada approval proved to be a major obstacle, with only 1.5 million bottles, valued at $21 million, ultimately being approved for apply [1].
Legal Recourse and Contract Sloppiness
AHS is now pursuing legal avenues to recoup the remaining $49 million. Premier Smith acknowledged “a lot of sloppiness in how this contract was written,” and stated that the province has revised its strategic procurement process to ensure greater standardization and due diligence in future contracts [1]. The province abandoned a backup plan to obtain intravenous painkillers using the already-paid funds.
Report Findings and Conflict of Interest
A report by retired Manitoba judge Raymond Wyant, appointed to investigate contracting irregularities, revealed that AHS did not follow proper procedures during the medication purchase [1]. The report also identified a conflict of interest involving a key AHS employee who had ties to medical supply firm MHCare. The report indicated that former health minister Jason Copping directed AHS to purchase the medication before securing Health Canada approval [1].
Renegotiation and Ongoing Credit
Forensic accountants RSM, contracted by Wyant, found that AHS renegotiated the deal in July 2023 for a different drug at a higher price, after Health Canada refused to approve most of the originally ordered medication [1]. Despite this, no additional medication has been delivered, leaving a $49 million credit with Atabay Pharmaceuticals [2], [3].
Current Status and Future Plans
Hospital and Surgical Health Services Minister Matt Jones stated that AHS is currently engaged in dispute resolution and may pursue legal action if necessary to recover the funds [1]. The government is working with Health Canada to identify alternative products that can be sourced through the existing credit with Atabay [2], [3], [4]. Details regarding specific products remain undisclosed pending Health Canada’s review.
Opposition Response
Opposition Leader Naheed Nenshi criticized the deal as a result of government orders and accused the premier of attempting to deflect blame. He emphasized the significant financial impact, noting that the interest earned on the $49 million could fund triage physicians across the province [1].
Former AHS CEO Athana Mentzelopoulos is currently suing AHS and cabinet minister Adriana LaGrange for wrongful dismissal, alleging she was terminated for raising concerns about contracting and procurement practices, including the children’s medication contract. These allegations remain unproven in court.
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