The U.S. Food and Drug Administration would gain greater authority over pharmacies that compound sterile drugs for tailored use and ship them across state lines, under proposed legislation announced on Friday.

The proposal from a bipartisan group of U.S. senators comes in the wake of a meningitis outbreak linked to a tainted steroid that has killed 53 people and sickened more than 700. The steroid was distributed by the Framingham, Massachusetts-based New England Compounding Center.

The proposal would draw a distinction between traditional compounding pharmacies, which make drugs for individual patients in response to specific prescriptions, and those such as NECC which make and ship products around the country that physicians can keep on their shelves for future use.

Ever since the meningitis outbreak, the FDA has been pilloried by Republicans in Congress who maintain the agency should have been more aggressive in its oversight of NECC.

The FDA concedes as much but argues that a complex legal landscape, combined with resistance from compounding pharmacies, has hampered its ability to regulate an industry that has grown exponentially over the past 10 years and whose function in many cases has changed.

The proposed legislation would essentially create a new class of drug company, to be known as "compounding manufacturers," that would be regulated by the FDA but be exempt from the full raft of regulatory requirements that apply to big pharmaceutical companies.

They would not, for example, be required to submit their products to the FDA for approval before selling them, and they would not have to enter complicated negotiations with the agency about what should and should not be included in the package insert. They will be required to provide more limited information.

It is unclear how many of the roughly 2,800 compounding pharmacies would fall into the new category but initial estimates place the number at fewer than 500. They would be defined not by their sales volume, but by whether they make products that are at high risk for contamination and sell them across state lines.

These newly-defined companies would no longer be licensed as pharmacies. They would be required to register with the FDA, and report to the agency any problems reported by patients or physicians. They would also be required to pay an annual fee to defray the cost of FDA inspections.

Traditional compounding pharmacies would continue to be licensed and regulated by state boards of pharmacy.

(Reporting by Toni Clarke in Washington; Editing by Vicki Allen)