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

Premier Danielle Smith says Alberta Health Services (AHS) is trying to get its money back 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."