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New federal law was passed last week that gives U.S. health regulators greater oversight of bulk pharmaceutical compounding and strengthens their ability to track drugs through the distribution pipeline. The Drug Quality and Security Act clarifies the authority of the Food and Drug Administration over compounded medications and creates a new class of compounding manufacturer known as an “outsourcing” facility, which will be able to sell to hospitals in bulk.

The law was prompted by quality control problems that led to a deadly outbreak of fungal meningitis in 2012 traced to a tainted pharmaceutical mixed by a Massachusetts compounding pharmacy. The product has been linked with more than 50 deaths. Following the outbreak, the FDA conducted 31 unannounced inspections in 18 states of other compounding pharmacies, finding conditions that could create a contamination risk in all but one.

FDA Chief Margaret Hamburg asked lawmakers at a Nov. 2012 hearing for more power to regulate compounding pharmacies, saying the agency had to defer to Mass. state authorities by law. “The challenge we have today is that there is a patchwork of legal authorities that oversee the action we can take,” Hamburg said at the time.

Besides giving more regulatory powers over compounders, the law authorizes the FDA to develop a national track-and-trace system to secure the pharmaceutical supply chain and minimize opportunities for contamination, adulteration, diversion, or counterfeiting, according to the White House. The law also creates a national set of standards to track pharmaceuticals through the distribution chain to help thwart the introduction of fake medications into the drug supply.

Last year, fake vials of Roche Holding AG’s cancer drug Avastin appeared in the United States from Britain, where they were purchased from a Turkish wholesaler.

In the United States, dozens of states have some type of regulation designed to track a drug’s pedigree, but the rules are inconsistent. This law is designed to apply a uniform standard nationwide.