Margaret MacDiarmid said Thursday she's shocked the internal investigation found evidence of potential conflict of interest and inappropriate conduct.
MacDiarmid, appointed health minister on Wednesday in a government cabinet shuffle, said the matter is serious enough to prompt the ministry to delay approval of Pharmacare coverage for some drugs.
"I am profoundly disappointed," she said. "I can't really overstate how deeply troubled I am over this. What we're talking about today is in the area of drug research."
MacDiarmid said four ministry employees have been fired and three others have been suspended with pay.
She said two contractors, who had agreements worth $4 million, were suspended and their access to data put on hold.
MacDiarmid said the investigation involves the abuse of drug research information — improperly using British Columbians' personal medical information for research purposes — but so far has not found any monetary gains.
She said there is some evidence of family connections between the government employees and the university researchers but would not elaborate further.
"It's not clear at all to me and I don't believe it's clear to anyone as to why this happened," said MacDiarmid.
"But what we believe has happened is that individuals have gone outside of the rules around taking data and using data with respect to research in the area of drugs," she said.
"The ministry contracts with some agencies to do research on our behalf so decisions can be made about drugs and I believe some of the legislation has not been followed — as to why, I do not know at this time."
MacDiarmid said no elected official is involved in the investigation.
She said the Health Ministry has contacted the universities of British Columbia and Victoria about their investigation and the potential police probe.
Lucie McNeill, director of public relations at UBC, said the university would co-operate with any kind of investigation.
"We will be looking into it internally ourselves once we have a bit more information," she said.
University of Victoria spokeswoman Denise Helm said that school will also co-operate.
"We take allegations of inappropriate behaviour very seriously," she said.
MacDiarmid said the Health Ministry first heard about the possible abuses when the office of the B.C. Auditor General said last March it received an anonymous allegation about contracting irregularities and inappropriate grant practices at the ministry's Pharmaceutical Services Division.
The pharmaceutical division is an arm of the Health Ministry that helps research and approve drugs.
Last April, after conducting staff interviews, the ministry decided to launch a formal investigation, said MacDiarmid. The government's Chief Information Officer and the Ministry of Citizens' Services and Open Government were called in to help with the probe, she said.
In June, data access for several ministry employees was suspended and the employees were suspended from work in July and August, she said.
Last month, after reviewing the internal probe results, the ministry handed its files over to the Mounties. Four of seven ministry employees were fired on Thursday.
MacDiarmid said the ministry has also taken other actions to tighten its management practices. All ministry data sharing with drug researchers has been suspended and all contracts related to drug and evidence development has also been suspended.
Any spending by the pharmaceutical services division now requires approval by the assistant deputy minister of health.
MacDiarmid said the ministry is also tightening its policy regarding awarding contracts to universities and all contracts with the ministry will undergo reviews.
This is not the first conflict of interest investigation involving B.C.'s health ministry in recent years.
In July 2011, former assistant deputy health minister Ron Danderfer was sentenced to two years probation and fined $3,690 after pleading guilty to breach of trust charges for his part in a corruption scandal linked to a lucrative government plan to computerize health-care records.