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A pharmacy assistant at a Peterborough, Ont., hospital discovered by accident that cancer drugs administered to 1,200 patients in two provinces were diluted.

Hospital officials say a red flag was raised when the assistant checked the labels on bags of the drug mixture provided by Marchese Hospital Solutions.

They say the assistant noticed that the label from Marchese was different from the ones on bags from their previous supplier, Baxter.

They say the Marchese label didn't include the concentration of the drug gemcitabine, but the Baxter labels did.

The officials say it was the first day the hospital was using the drug mixture from Marchese, which is why they still had some bags left from Baxter.

It's now known that there was too much saline in the bags containing cyclophosphamide and gemcitabine, in effect watering down the prescribed drug concentrations by up to 20 per cent.

Patients in five hospitals in Ontario and New Brunswick received watered down chemotherapy drugs purchased from Marchese, some for as long as a year.

The company said it prepared the drugs the way it was asked to under its contract and under the supervision of a licensed pharmacist.

But the drug mixture Marchese was producing was completely different from the one the hospitals thought they were buying, the committee heard.

Three staff members at the Peterborough hospital who discovered the problem wish to remain anonymous, officials said.