The president of the company that supplied diluted cancer drugs to five hospitals in Ontario and New Brunswick says both Health Canada and provincial regulators declined to regulate it.

Marita Zaffiro says Marchese Hospital Solutions never attempted to operate without regulatory oversight and mixed the drugs under the supervision of a licensed pharmacist.

"Our first priority was to ensure that the right treatments reached patients. That has been done. Secondly, we need to understand how assumptions about product use which were not consistent with the contractually supplied preparation and labelling led to this issue."

She says the company asked Health Canada and the Ontario College of Pharmacists for approval, but both declined.

She says the products were mixed properly as per their contract with MedBuy, an organization that made bulk purchases for hospitals.

Marchese Hospital Solutions has been under scrutiny since it was discovered that 1,200 patients received watered down chemotherapy drugs purchased from the company.

The province and Health Canada have since acknowledged that there was no oversight of the company and don't know how many others like Marchese are operating in Canada.

Meanwhile, LHSC told members they regret patients received watered down drugs, but it was beyond their control.

Half a dozen brass from the hospital testified that the switch was made from another drug supplier to Marchese Hospital Solutions in the fall of 2011.

Officials said another company -- MedBuy -- oversees all drug purchases for LHSC, and that is to maximize patient care and not about saving money.

They also testified that there were no warning signs from Marchese that chemotherapy drugs would be diluted.

With files from The Canadian Press