Alberta Health Services taking legal steps to try and recoup $49M for medication never received

premiere Danielle ian douglas smith says Alberta wellness Services (AHS) is trying to acquire its money endorse after paying $49 million to an importer and a Turkish drug company for products it didn't receive.

The purchase arrangement for which AHS is trying to recoup money was the second iteration of an initial deal that did see some medication arrive.

The initial purchase agreement for five million bottles of children's painkillers, inked in 2022 amid a nationwide medication shortage, is a part of ongoing probes by the RCMP and the auditor general into provincial health procurement.

At an unrelated news conference on Wednesday, Smith told reporters that AHS is using legal avenues to try to recoup the money, abandoning its backup plan to obtain intravenous painkillers for money it had already paid.

"There's a lot of sloppiness in how this contract was written, which is why we have now changed our process for strategic procurement to ensure that there's standardization on all of that," Smith said.

She added that she expects AHS to do more due diligence when signing contracts.

Smith did not directly answer questions about why AHS waited more than three years after the initial deal before trying to recoup the money through legal means, or whether other suppliers have the same leeway on delivering products.

A retired Manitoba judge appointed by the United Conservative government to investigate allegations of contracting irregularities and possible political influence first reported in October that AHS did not follow procedures in the medication purchase.

Justice Raymond Wyant also found a key employee was in a conflict of interest, having both worked for AHS and having a relationship and an email address with medical supply firm MHCare while working to source the medication.

That report said former health minister Jason Copping ordered AHS to buy the medication before obtaining Health Canada approval.

In a followup report released last week, forensic accountants RSM — contracted by Wyant — reported that AHS renegotiated the children's medication deal for a different drug at a higher price in July 2023 when Health Canada wouldn't allow AHS to import most of the medication it had originally ordered.

AHS hit more federal regulatory hurdles, and no medication ever arrived, the report said.

Hospital and Surgical Health Services Minister Matt Jones told reporters at the legislature on Wednesday that AHS is working through a legal dispute resolution process, and if that is unsuccessful, could turn to the courts to try and recoup the money.

"We have paid $49 million and not received the products as ordered," Jones said. "It's my expectation that we recover the $49 million."

Jones would not say whether AHS plans to send MHCare or the Turkish pharmaceutical firm Atabay any more money for the two years remaining in its medication purchase contract.

Wyant's report in October said the contract did not specify how much money was destined for each company.

Jones called the deal an "unfortunate contracting and procurement incident," and said the government is acting upon Wyant's 18 recommendations.

Opposition Leader Naheed Nenshi said he is pleased the premier acknowledged the medication deal was a poor one, after defending the rationale for the purchase for several years.

However, he said AHS entered the first contract on government orders, and he believes the premier is attempting to deflect blame.

"The premier never, ever takes responsibility," Nenshi told reporters Wednesday. "She never, ever apologizes. But this shoddy contract was of her own making. "

Nenshi said he believes the government has been lackadaisical with public money.

"This is no joke. This is $50 million. The interest on that alone would hire triage physicians in the whole province," he said, referring to a doctor role the province has committed to adding to taxed emergency rooms.

Former AHS CEO Athana Mentzelopoulos is suing her former employer and cabinet minister Adriana LaGrange for wrongful dismissal, alleging she was fired for probing too deeply into concerns about some AHS contracting and procurement deals, including the children's medication contract.

The allegations have not been tested in court. Her former employers say she was not fulfilling her duties.

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