Risky Gamble on Children’s Medication

In 2022, the government of Alberta, Canada, led by Premier Danielle Smith, entered into a $70 million agreement to import children’s pain relief medication from Turkey. This decision,intended to alleviate a shortage of pediatric ibuprofen and acetaminophen,has as become a subject of intense scrutiny and controversy.

The deal, involving five million bottles of medication from Atabay Pharmaceuticals, was pursued despite expert advice suggesting a more cautious approach. Specifically, briefing documents prepared by Alberta Health officials in november 2022, for then-health minister Jason Copping and Premier Smith, outlined three options, advising that the province ask Health Canada to take the lead. The documents warned about the risk of a “significant net loss of funds.” These documents clearly detailed the downsides of each path.

The Alberta government chose what was arguably the riskiest path: signing a deal to import the medicine before receiving regulatory clearance from Health Canada which raised questions about due diligence and risk management in government procurement.

The Allure and Peril of Expediency

the rationale at the time was that Alberta signed a contract for five million bottles – roughly eight times the province’s annual demand, according to figures presented in the briefing documents – because it was the minimum purchase order set by the supplier.In hindsight, this justification raises critical questions about the negotiation process and whether the province prioritized speed over financial prudence.

Alberta spent $70 million, plus shipping, to procure the drugs but only ever received 1.5 million bottles of medicine. The province has now hatched a plan to send the unwanted Turkish supply to Ukraine.

This situation highlights a common tension in healthcare procurement: the need to quickly address shortages versus the importance of ensuring value for taxpayer money and avoiding waste. It is indeed a scenario that resonates deeply in the U.S., where drug shortages and rising healthcare costs are persistent concerns.

Consider, for example, the frequent shortages of generic drugs in the U.S., frequently enough caused by manufacturing issues or supply chain disruptions. These shortages can lead to price gouging and force healthcare providers to make arduous choices about patient care. A similar situation unfolded when the province of Alberta found itself with a surplus of medication it couldn’t effectively utilize.

Mounting Scrutiny and Legal fallout

Edmonton-based mhcare Medical facilitated the import deal. The company has been holding $49.2-million of the province’s medication payments for “well over a year,” according to a letter Alberta Health services, the provincial health authority, sent the company last December.

Adding fuel to the fire, the original deal is now a key part of allegations – contained in a wrongful dismissal lawsuit by former AHS chief executive Athana Mentzelopoulos – of improper contracting and procurement practices at AHS and Alberta Health, which is the government ministry. None of the allegations have been tested in court.

The RCMP,Alberta’s Auditor-General and a former judge on behalf of the government are investigating facets of Ms. Mentzelopoulos’s allegations.

A Timeline of Events

conflicting Advice and Missed Opportunities

The Premier and health minister said, when announcing the deal in December 2022, that the government wanted to help families by alleviating the shortage of cold and flu medication on pharmacy shelves and in hospitals. The politicians were provided with three options to achieve that.

Alberta Health officials, in a Nov. 23 note to Mr.Copping, recommended the most financially conservative choice: that Alberta ask Health Canada to bring in the drugs, which the federal agency could then distribute across the country. By opting for this plan, Alberta could dodge the risk of paying for – and being stuck with – an needless amount of medication.

“Based on public data identifying the number of pediatric patients in the province, 5M bottles would be an excessive amount of supply for the market, and product will likely expire before utilized,”

Alberta Health Officials

A document advising the premier, dated Nov. 25, favored a second option: that Alberta pursue the import deal alone, but only after obtaining the necessary approvals from Health Canada. The briefing note warned that approvals might not come until demand tapered and regular supply increased. Mr. Copping is listed as the contact at the bottom of the document advising the Premier.

Both of these options were designed to mitigate Alberta’s financial risk while still pursuing a deal to fulfill Ms. Smith’s desire to solve the medication shortage.

The government, however, chose the third path contained in both briefing memos. Alberta signed a deal to buy five million bottles of medicine prior to receiving Health Canada’s approval.

The briefing notes warned that if Alberta selected this option it could end up with too much medicine, too late, or it could end up with little to no medicine despite paying upfront.

How does sourcing medications internationally, as seen in the Alberta case, impact the regulatory oversight and potential risks within the U.S. healthcare system?