Section 36E. (a) As used in this section and in sections 24 to 42D, inclusive, the following words shall have the following meanings unless the context clearly requires otherwise:

''Operate as an outsourcing facility'', compound and distribute a sterile drug preparation within or outside of the commonwealth: (i) in volumes inconsistent with routinely observed volume patterns associated with patient-specific prescriptions; or (ii) in the absence of accountability documentation.

''Outsourcing facility'', an entity at 1 geographic location or address that: (i) is engaged in the compounding of sterile drug preparations; and (ii) has registered with the federal Food and Drug Administration, FDA, as an outsourcing facility pursuant to 21 U.S.C. section 353b.

(b) The board may, upon application made in a manner and form determined by the board, register an entity located within the commonwealth that intends to operate as an outsourcing facility. An applicant for registration as an outsourcing facility shall provide proof of the following: (i) a valid, current registration with the FDA pursuant to section 503B of the Federal Food, Drug, and Cosmetic Act and; (ii) inspection by the FDA in connection with the section 503B registration under said Federal Food, Drug, and Cosmetic Act within the 2 years immediately preceding the application; and (iii) application and eligibility for registration to manufacture or distribute controlled substances pursuant to section 12 of chapter 94C. If the applicant has met the requirements set forth in clauses (i) and (iii) but has not been inspected by the FDA within the 2 years immediately preceding the application, the applicant may receive a provisional registration to compound; provided, however, that the applicant may not distribute a sterile drug preparation within or outside of the commonwealth until it has been inspected pursuant to this subsection. The application for registration as an outsourcing facility shall be accompanied by a fee for registration in an amount to be determined by the secretary of administration and finance pursuant to section 3B of chapter 7. The fee shall be deposited into the Quality in Health Professions Trust Fund established in section 35X of chapter 10.

(c) The board may, upon application made in a manner and form determined by the board, register an entity located outside of the commonwealth that intends to operate as a nonresident outsourcing facility. An applicant for registration as a nonresident outsourcing facility shall provide proof of the following: (i) a valid, current registration with the FDA pursuant to section 503B of the Federal Food, Drug, and Cosmetic Act; (ii) inspection by the FDA in connection with the section 503B registration under said Federal Food, Drug, and Cosmetic Act within the 2 years immediately preceding the application; and (iii) application and eligibility for registration to manufacture or distribute controlled substances pursuant to section 12 of chapter 94C. The application for registration as a nonresident outsourcing facility shall be accompanied by a fee for registration in an amount to be determined by the secretary pursuant to section 3B of chapter 7. The fee shall be deposited into the Quality in Health Professions Trust Fund established in section 35X of chapter 10.

(d) Registrations issued pursuant to this section shall expire on December 31 of each odd numbered year following the date of its issuance and may be renewed upon application made in a manner and form determined by the board. An applicant for renewal of a registration issued pursuant to this section shall provide satisfactory proof of a valid, current registration with the FDA pursuant to section 503B of the Federal Food, Drug, and Cosmetic Act. The application for renewal of a registration as an outsourcing facility shall be accompanied by a fee for registration in an amount to be determined by the secretary pursuant to section 3B of chapter 7. The fee shall be deposited into the Quality in Health Professions Trust Fund established in section 35X of chapter 10.

(e) Grounds for denial of a registration, revocation or suspension of a registration or non-renewal of a registration issued pursuant to this section shall include, but shall not be limited to: (i) failure to maintain a current, valid registration with the FDA pursuant to section 503B of the Federal Food, Drug, and Cosmetic Act; (ii) an inspection by the FDA that results in a warning letter that prohibits commercial distribution by the registered facility of sterile drug preparations within or outside of the commonwealth; (iii) material misrepresentation, omission or falsification of any information furnished to the board; (iv) failure to comply with reporting requirements established by the board with respect to registration with or inspections by the FDA; (v) failure to adhere to the most current standards established under cGMP; (vi) the lack of suitability of the applicant or registrant; or (vii) failure to maintain a current, valid Massachusetts controlled substances registration. This provision shall not limit the board's authority pursuant to section 42A or 61.