Brown-envelope policy called a failure

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This article was published 04/02/2009 (6291 days ago), so information in it may no longer be current.

ACCEPTING money in brown envelopes is not an appropriate way to crack down on influential gifts from medical suppliers, pharmaceutical watchdogs said Tuesday.

Wendy Armstrong, an Edmonton-based health policy analyst and board member of non-profit drug watchdog PharmaWatch, said the Winnipeg Regional Health Authority’s value-added policy is likely a sincere attempt to limit the influence of medical suppliers — it just doesn’t work.

Armstrong said any money or gifts received from suppliers have a profound influence on the price paid for medical goods and services and the quality of health care offered to Canadians.

She said health care has been exempt from the scrutiny given to other government departments, and the endemic practice of accepting money and other benefits from contractors wouldn’t be tolerated in other sectors. Unlike in the United States, Armstrong said, there is no national trade commission that polices extra donations received on top of contract bids, and that most Canadian authorities turn a blind eye to money from drug and medical equipment suppliers offer to public health authorities.

Last weekend, a Free Press investigation revealed the Winnipeg Regional Health Authority accepted more than $20 million in money, equipment and other gifts handed over in brown envelopes from medical suppliers who had won health contracts. The WRHA said that no employee or board members have pocketed any of the money directly.

The report prompted Tory Leader Hugh McFadyen to say he’ll ask the provincial auditor to investigate how the money was spent.

CEO Dr. Brian Postl defended the brown-envelope policy earlier this week, saying it’s a way to keep any extras that suppliers offer separate, which prevents them from influencing who wins a bid. Health Minister Theresa Oswald echoed his statements, and told the Free Press she doesn’t object to accepting unrestricted grants from medical suppliers who want to invest in health care and are "good corporate citizens."

Armstrong said whether it’s education for employees or free equipment, health care sponsored by suppliers is not in the best interest of Canadians.

"It was an ill-considered decision," Armstrong said of the brown-envelope policy.

"It’s been amazing to me how over the last decade things that would’ve been considered unconscionable 15 years ago, are now considered part of doing business. And brown envelopes are included in that. Many deals are beyond public scrutiny."

Part of the problem, Armstrong said, is that health care has morphed into a big business over the last decade and drug and medical supply companies are increasingly using their relationships with physicians and corporate managers as a way to market their products.

While WRHA officials have said the money has virtually dried up since they stopped accepting restricted funds, documents show that several restricted and unrestricted grants from medical suppliers put toward operating and equipment costs of various departments extend until 2011.

The WRHA received more than $2.2 million in unrestricted cash from suppliers that was allocated to other accounts as an extra source of funding — including the corporate department, which accepted more than $1.1 million. The WRHA has also accepted more than $17.9 million in other funds put toward research, education and hospital programs at the discretion of the medical supply companies. The WRHA will not provide a detailed breakdown of how the money was spent or which suppliers offered value-adds.

B.C.-based Dr. Warren Bell, an outspoken critic of accepting freebies from drug and medical suppliers, said the WRHA’s policy is a "crude” example of the increasingly entrenched relationship between medical supply companies and health regions.

He said the simplistic policy runs counter to all scientific evidence that shows people see others who give them gifts in a more favourable light. Bell said the only way to limit influence is to cut out all gifts.

"I suspect some of the people try very hard to believe (it doesn’t corrupt the bidding process)," Bell said. "But they’re flying in the face of every study and every analysis that’s ever been done of this situation."

jen.skerritt@freepress.mb.ca