For the first time, hospitals will only be able to purchase drugs from accredited, licensed or otherwise approved suppliers, the governing Liberals said.
The Ontario College of Pharmacists will also be responsible for inspecting drug preparation facilities where pharmacists and pharmacy technicians work.
Ontario has closed the oversight gap, but more needs to be done to ensure there's oversight of these companies across Canada, said Health Minister Deb Matthews.
"This is a national issue and it does require a national solution," she said.
"But I didn't want to wait for that, so we're moving forward to protect Ontario patients."
The Ontario Hospital Association has asked for some flexibility in the new rules to account for emergencies like drug shortages.
"I think patients should have complete confidence that the drugs they're getting are the drugs that were prescribed, and that they come from a licensed, accredited, inspected facility," Matthews said.
The new regulations come in the wake of the drug scare that revealed the lack of both federal and provincial oversight over companies that mix drugs.
Marchese Hospital Solutions prepared the drug-and-saline mixture that was supplied to four hospitals in Ontario and one in New Brunswick.
The extra saline in the bags containing cyclophosphamide and gemcitabine effectively watered down the prescribed drug concentrations by up to 20 per cent.
Some of the cancer patients were receiving the diluted drugs for as long as a year.
Health Canada and the Ontario government have since acknowledged that there was no oversight of the company and that they had no idea how many companies like Marchese were operating in Canada.
The federal government has since ordered that compounding and admixing can continue if it is done within a hospital, under the supervision of a provincially licensed pharmacist, or in a manner that meets the licensing and manufacturing requirements of the Food and Drugs Act. But it's looking for a long-term solution to the problem.
Marchese has said it prepared the drugs the way it was asked to under its contract and under the supervision of a licensed pharmacist.
But Medbuy, the bulk purchaser that arranged the contract, said Marchese didn't meet the contract's requirement to provide an exact concentration of the drugs in the saline solution.
A legislative committee looking into the issue has heard that bags of saline usually contain some extra liquid to account for evaporation. But Marchese didn't account for it, thinking each bag would be given to a single patient. Their labels also didn't indicate how much additional saline was in the bag, it heard.
The hospitals were extracting fluid from the bag to prepare chemotherapy treatments for different patients, unaware that the drug mixture had too much saline.