Alberta Health Services is taking legal action to recover $49 million for drugs that were never delivered.

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 pharmaceutical company for products it did not receive.

The purchasing arrangement for which AHS is trying to recover money was the second iteration of an initial deal that included some drugs.

The initial purchase agreement for five million bottles of children’s painkillers in 2022 is part of an ongoing investigation by the RCMP and the auditor general into provincial health procurement amid drug shortages across the country.

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

“There is a lot of carelessness in the way this contract was written, which is why we have now changed our process for strategic purchases to make sure there is standardization across all of these,” Smith said.

He said he hopes AHS will be more careful when signing contracts.

Smith did not directly answer questions about why AHS waited more than three years after the initial deal before trying to get the money back through legal means, or whether other suppliers have similar leeway to distribute the product.

A retired Manitoba judge appointed by the United Conservative government to investigate allegations of contracting irregularities and potential political influence first reported in October that AHS had not followed procedures in drug purchases.

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

That report said former Health Minister Jason Copping ordered AHS to purchase the drug before receiving Health Canada approval.

In a followup report released last week, forensic accountants RSM – contracted by Wyant – reported that AHS renegotiated the children’s drug deal for a different drug in July 2023 after Health Canada did not allow AHS to import most of the drugs originally ordered.

AHS faced more federal regulatory hurdles, and no drug ever arrived, the report said.

MHCare attorney Scott Hutchison said a contract exists and the terms were negotiated and approved by AHS “at the highest levels.”

“MHCare continues to believe that it will be able to fully meet the terms of its contract with AHS, as it has always intended,” Hutchison said in a statement. “MHCare is in active communication with Health Canada. Regulatory approval may be frustratingly lengthy but is beyond our control.”

Hospitals and Surgical Health Services Minister Matt Jones told reporters in the legislature on Wednesday that AHS is working through a legal dispute resolution process, and if that is unsuccessful, the courts could be turned to recover the money.

“We paid $49 million and have not received the products we ordered,” Jones said. “My expectation is that we will recover $49 million.”

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

Voyant reported in October that the contract did not specify how much money would be given to each company.

Jones called the deal an “unfortunate contracting and procurement incident” and said the government was acting on Wyant’s 18 recommendations.

Opposition leader Nahid Nenshi said he was pleased the prime minister acknowledged the drug deal was bad, after defending the justification for the purchase for several years.

However, he said AHS had entered into the first contract on government orders and believed the Prime Minister was attempting to avoid blame.

“The prime minister never takes responsibility,” Nenshi told reporters on Wednesday. “She never apologizes. But this shitty contract was of her own making.”

Nenshi said he believed the government had been indifferent in terms of public funding.

“This is no joke. This is $50 million. The interest alone would be enough to hire triage physicians across the province,” he said.

Former AHS CEO Athanas Mentzelopoulos is suing her former employer and Cabinet Minister Adriana LaGrange for wrongful dismissal, alleging she was fired for not deeply investigating concerns about certain AHS contracts and procurement deals, including a children’s drug contract.

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