In the early 1980s, thousands of Canadians were infected with HIV and at least another 60,000 or more with hepatitis C, from tainted blood products distributed by the Canadian Red Cross who were responsible for the country's blood donation system. This agency took most of the blame for the public health calamity, but there were many others involved in the scandal, producing a web of disastrous decisions heavily contaminated with a dysfunctional negligence that bordered on — and sometimes crossed the line into — criminality. In the end, facing multiple accusations of criminal negligence, the Red Cross was stripped of its blood collection responsibilities and a new Federal agency established, with billions of dollars being paid in compensation to the victims.
The root cause of this enormous disaster was the existence of an unregulated and uncontrolled medical-pharma industry in the US, resulting in the private-enterprise, profit-maximising commercialisation of the business of blood collection and distribution. One result of the American system was the collection of blood from US prisons, the most high-risk of all sources but one with a captive population and a fundamentally criminal environment perfectly suited to the style of the US pharma companies. At the time, Canada imported a great deal of blood from the US, primarily through a US blood broker named Continental Pharma-Cryosan, who sold their products to a Canadian blood fractionator named Connaught Laboratories which was then a Canadian state-owned company. Connaught re-sold its blood and blood products to the Canadian Red Cross for final distribution to hospitals and other medical facilities.
In the final analysis, it seems Connaught Labs carried most of the responsibility for the tragedy and should have been apportioned most of the blame. In 1971, more than ten years prior to this disaster, the Canadian government had forbidden the practice of collecting blood from prisons because of the high risk of infections, and Connaught was fully aware of this fact, so purchasing blood from US prisons was hardly an acceptable alternative. The shipments of US blood were not specifically identified as originating in US prisons, the shipper merely being identified as 'ADC', without specifying that the acronym stood for the 'Arkansas Department of Corrections' - the prison system. However, supporting documentation which included reports from the US FDA did clearly identify the source, but the executives at Connaught claimed they didn't bother to read them. The director of blood fractionation at Connaught, a Dr. Anthony Magnin, testified that collecting blood from prisoners "was not considered inherently a problem", and that the identifying documents were either not read at all "or they were read and not acted upon".
The evidence at the judicial hearings indicated that Connaught's safeguards and checks were more or less entirely absent for years. Connaught could have initiated site checks on the sources of its blood shipments, and could have performed its own checks on the purity of the shipments, but chose to do neither, relying instead on US FDA reports which were of no value except to identify the source because the FDA performed no checks or oversight worthy of mention, the entire US operation being essentially an unsupervised Wild West. The US Health Service had strongly discouraged the collection of blood from high-risk areas and, though the practice was not made illegal, this blood was no longer sold in the US and was therefore exported. This left Connaught in the position of importing and selling large volumes of blood that had been rejected by US authorities.
Continental Pharma was informed by the FDA in June 1983 of potential problems with plasma it had supplied to Connaught, but did not initiate a recall and did not inform Connaught until months later. Meanwhile, an FBI investigation determined that Continental Pharma had committed numerous illegalities and broken many laws, but they appear to not have notified Canada. And for their part, the Canadian RCMP apparently failed to inform the Americans when their investigation revealed that Continental Pharma had been falsely labelling blood as originating with Swedish donors when it had actually been extracted from Russian cadavers.
But the rot went still deeper, and it wasn't only Continental Pharma who crossed the line from negligence to criminality. In 1983, a senior Connaught executive wrote a letter to assure the Canadian Red Cross that none of its blood plasma sources were located "in population centers in the US shown to bear high risk for AIDS", and further that Connaught were ''keenly aware of the potential risk of AIDS for the hemophiliac". These statements were clearly untrue since a month earlier the company had received documents proving it had been purchasing blood and plasma collected from US prisons, and had purchased directly from the prisons as well. Not only that, Connaught was at the same time purchasing blood supplies directly from a blood bank in San Francisco that was located in the center of Skid Row and was on the FDA's warning list as one of the world's highest-risk areas for HIV. For Connaught to have given those assurances to the Red Cross in light of the true facts, was criminally irresponsible at best.
While HIV tests were not initially considered accurate, there were effective tests that would have caught most of the cases of Hepatitis C. Moreover, after evidence was mounting that HIV and Hepatitis were being transmitted through contaminated blood products, Connaught made no effort to locate or inform those who might have been infected. In addition, a heat treatment had been developed for the blood products that would have killed the resident infections, but Connaught neglected to take this step and yet continued to sell its stock of potentially contaminated products. When developed countries began turning en masse to the new heat-treated products, Connaught began looking to developing nations as likely markets for its contaminated products. During the enquiry, confidential memos surfaced from the company that suggested Iran and Spain were "possible markets", and suggested they "could be in a position to sell six million units to France". They then apparently had second thoughts and decided their contaminated "current product should not be offered for sale to developed countries".
The blood scandal exploded first in Canada, from a lawsuit filed in the US by a prisoner who claimed to have been infected with Hepatitis C from transfusions obtained through the prison system. It was then that the FDA issued new guidelines and informed Connaught's broker Continental Pharma of the virtual certainty of contamination. After a delay of months, the firm notified Connaught who then were compelled to inform the Canadian Red Cross, who then cancelled their contract with Connaught. But none of the parties initiated a recall of the contaminated blood, apparently preferring to 'ride out the storm' and slowly move to safer products. The cancellation of the Red Cross contract of course was a major crisis for Connaught since this was its major source of revenue but, with the assistance of pressure from the government, the contract was renewed.
The Canadian Red Cross came under substantial and even violent criticism, primarily for its cowardice in failing to notify the public of its contaminated blood, for continuing to distribute tainted blood products in silence, and for denying the truth when it became public. All involved parties devoted their energy to circling the wagons and trying to contain the scandal instead of protecting and informing the public, worrying more about personal liability and recriminations than the huge numbers of infected and dying people. There was some confusion (on which all concerned parties attempted to place the blame) in that the Canadian government required only that blood purchased from US sources originate from locations approved by the FDA. It was not illegal to collect prison blood in the US, and though this product was no longer being sold domestically it still retained its FDA approval on the (implicit) understanding it would be exported. It therefore complied with Canada's stipulations in law but clearly not in intent.
Connaught Labs was a kind of treasure of Canada's government at the time, having been established in an effort to create and nurture sophisticated elements of the nation's health-care industry. It was a high-profile company that had developed a history of problems, all of which tended to be ignored and which quietly multiplied. Paul Martin, who would later become Canada's Prime Minister, was on the board of directors of Connaught's holding company which shared directors, meaning the lengthy discussions of the company's blood trade could not have escaped attention, and many placed much of the overall blame on Mr. Martin, especially considering his reluctance to examine the matter.
In Canada, judicial hearings and enquiries generally collect and state facts without being permitted to assign blame or liability, but this case was different and the judge heading the enquiry, a Mr. Justice Krever, fully intended to assign not only blame but criminal liability in his final report. With this knowledge, Mr. Martin and other members of the Cabinet of Canada's government pursued Justice Krever all the way to Canada's Supreme Court in a failed attempt to prevent him from doing so. There was substantial criticism of Mr. Martin and Connaught's holding company for refusal to cooperate with the judicial enquiry, effectively stonewalling all efforts to obtain information, claiming a thorough search of government files found no records of any kind dealing with the matter.
As a result of the judicial enquiry, Canada's RCMP launched a five-year investigation into the matter and eventually laid 32 criminal charges against several doctors, various government bureaucrats, the head of the Red Cross blood program and a Vice-President of the US firm Armour Pharmaceutical. Connaught Labs was charged with criminal offenses as was the Red Cross itself, but the Red Cross was fined only $5,000 for distributing a contaminated drug and the criminal charges were dropped. After a trial that lasted 18 months, the judge ruled that there was "no crime" in either the actions of the doctors, Connaught Labs, the Red Cross, or the US firm, a decision that still today angers Canadians, amid accusations of a massive government cover-up and judicial interference. Most observers considered the verdict an unforgiveable miscarriage of justice. Justice Mary Lou Benotto delivered her verdict by stating:
"There was no conduct that showed wanton and reckless disregard. There was no marked departure from the standard of a reasonable person. On the contrary, the conduct examined in detail for over one and a half years confirms reasonable, responsible and professional actions and responses during a difficult time."
Both Prime Minister Martin and Connaught Labs escaped criminal liability, the Canadian Red Cross was stripped of its blood collection duties and was essentially bankrupted by penalties and civil lawsuits. The Canadian government was forced to settle a class action lawsuit for well over one billion dollars, but the end result was that nobody paid except the people. The Red Cross and Connaught were sued in civil actions paid by shareholders, and the government's billion-dollar settlement came from the taxpayers. The involved individuals avoided all criminal and financial liability for the tens of thousands of totally preventable infections and deaths from AIDS and Hepatitis.