# C_2008311EN.01002701.xml

| 5.12.2008 | EN | Official Journal of the European Union | C 311/27 |
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5.12.2008

EN

Official Journal of the European Union

C 311/27

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REPORT

REPORT

on the annual accounts of the European Medicines Agency for the financial year 2007 together with the Agency's replies

(2008/C 311/05)

CONTENTS

| 1-2 | INTRODUCTION |
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1-2

| 3-6 | STATEMENT OF ASSURANCE |
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3-6

| 7-9 | OBSERVATIONS |
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7-9

Tables 1 to 4

The Agency's replies

The Agency's replies

INTRODUCTION

| 1. | The European Medicines Agency (hereinafter the Agency) was created by Council Regulation (EEC) No 2309/93 of 22 July 1993, which was replaced by Regulation (EC) No 726/2004 of the European Parliament and of the Council of 31 March 2004 (1). The Agency operates through a network and coordinates the scientific resources made available by the national authorities in order to ensure the evaluation and supervision of medicinal products for human or veterinary use. |
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1.

The European Medicines Agency (hereinafter the Agency) was created by Council Regulation (EEC) No 2309/93 of 22 July 1993, which was replaced by Regulation (EC) No 726/2004 of the European Parliament and of the Council of 31 March 2004 (1). The Agency operates through a network and coordinates the scientific resources made available by the national authorities in order to ensure the evaluation and supervision of medicinal products for human or veterinary use.

1

| 2. | Table 1 summarises the Agency's competences and activities. Key data summarised from the financial statements drawn up by the Agency for the financial year 2007 are presented inTables 2, 3 and 4for information purposes. |
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2.

Table 1 summarises the Agency's competences and activities. Key data summarised from the financial statements drawn up by the Agency for the financial year 2007 are presented inTables 2, 3 and 4for information purposes.

Table 1

Tables 2, 3 and 4

STATEMENT OF ASSURANCE

| 3. | This Statement is addressed to the European Parliament and the Council in accordance with Article 185(2) of Council Regulation (EC, Euratom) No 1605/2002 (2); it was drawn up following an examination of the Agency's accounts, as required by Article 248 of the Treaty establishing the European Community. |
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3.

This Statement is addressed to the European Parliament and the Council in accordance with Article 185(2) of Council Regulation (EC, Euratom) No 1605/2002 (2); it was drawn up following an examination of the Agency's accounts, as required by Article 248 of the Treaty establishing the European Community.

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| 4. | The Agency's accounts for the financial year ended 31 December 2007 (3) were drawn up by its Executive Director, pursuant to Article 68 of Regulation (EC) No 726/2004, and sent to the Court, which is required to give a Statement of Assurance on their reliability and on the legality and regularity of the underlying transactions. |
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4.

The Agency's accounts for the financial year ended 31 December 2007 (3) were drawn up by its Executive Director, pursuant to Article 68 of Regulation (EC) No 726/2004, and sent to the Court, which is required to give a Statement of Assurance on their reliability and on the legality and regularity of the underlying transactions.

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| 5. | The Court conducted its audit in accordance with the IFAC and ISSAI (4) International Auditing Standards and Codes of Ethics, insofar as these are applicable in the European Community context. The audit was planned and performed to obtain reasonable assurance that the accounts are reliable and that the underlying transactions are legal and regular. |
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5.

The Court conducted its audit in accordance with the IFAC and ISSAI (4) International Auditing Standards and Codes of Ethics, insofar as these are applicable in the European Community context. The audit was planned and performed to obtain reasonable assurance that the accounts are reliable and that the underlying transactions are legal and regular.

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| 6. | The Court has thus obtained a reasonable basis for the Statement set out below:

  Reliability of the accountsThe Agency's accounts for the financial year ended 31 December 2007 are, in all material respects, reliable.Legality and regularity of the underlying transactionsThe transactions underlying the Agency's annual accounts, taken as a whole, are legal and regular.The observations which follow do not call the Court's Statement into question. |
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6.

The Court has thus obtained a reasonable basis for the Statement set out below:

Reliability of the accountsThe Agency's accounts for the financial year ended 31 December 2007 are, in all material respects, reliable.Legality and regularity of the underlying transactionsThe transactions underlying the Agency's annual accounts, taken as a whole, are legal and regular.The observations which follow do not call the Court's Statement into question.

Reliability of the accountsThe Agency's accounts for the financial year ended 31 December 2007 are, in all material respects, reliable.Legality and regularity of the underlying transactionsThe transactions underlying the Agency's annual accounts, taken as a whole, are legal and regular.The observations which follow do not call the Court's Statement into question.

OBSERVATIONS

| 7. | The Agency's final budget for 2007 amounted to 163,1 million euro as compared with 138,7 million euro the previous year. Of the budget appropriations, 32 million euro were carried over and 4 million euro were cancelled. As in 2006, the high level of carry-overs for administrative expenditure, 18,9 million euro, was mainly due to the programme Telematics for the regulation of medical products. The Agency and the other parties involved in this programme must ensure better planning and monitoring of the implementation of the programme. This situation is at odds with the annuality principle. The Agency should consider using the differentiated appropriations system for the Telematics programme which is more suitable for the budgetary management of such programmes. |
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7.

The Agency's final budget for 2007 amounted to 163,1 million euro as compared with 138,7 million euro the previous year. Of the budget appropriations, 32 million euro were carried over and 4 million euro were cancelled. As in 2006, the high level of carry-overs for administrative expenditure, 18,9 million euro, was mainly due to the programme Telematics for the regulation of medical products. The Agency and the other parties involved in this programme must ensure better planning and monitoring of the implementation of the programme. This situation is at odds with the annuality principle. The Agency should consider using the differentiated appropriations system for the Telematics programme which is more suitable for the budgetary management of such programmes.

| 8. | The audit of the tendering procedures showed weaknesses: insufficient justification of the chosen procedures (5) and inadequate evaluation methods for the price criteria (6). In the case of a joint public procurement procedure with five other Agencies, the volume of the services to be procured had not been adequately identified. This resulted in difficulties in evaluating the cost of the bids as well as the need to review the volumes and values of the services to be procured. The Agency should aim to improve the quality of its public procurement procedures in order to address the issues highlighted above. |
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8.

The audit of the tendering procedures showed weaknesses: insufficient justification of the chosen procedures (5) and inadequate evaluation methods for the price criteria (6). In the case of a joint public procurement procedure with five other Agencies, the volume of the services to be procured had not been adequately identified. This resulted in difficulties in evaluating the cost of the bids as well as the need to review the volumes and values of the services to be procured. The Agency should aim to improve the quality of its public procurement procedures in order to address the issues highlighted above.

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6

| 9. | In its 2006 report (7), the Court observed that the Agency had not performed a comprehensive analysis of the costs incurred by rapporteurs. The Management Board of the Agency has established a Costing Group which at the end of 2007 prepared a report on a generally accepted international costing methods and a proposal for an alternative option for remunerating the rapporteurs. The Court welcomes the steps the Agency has made in order to address the issue of the evaluation of the costs and calls for further progress. |
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9.

In its 2006 report (7), the Court observed that the Agency had not performed a comprehensive analysis of the costs incurred by rapporteurs. The Management Board of the Agency has established a Costing Group which at the end of 2007 prepared a report on a generally accepted international costing methods and a proposal for an alternative option for remunerating the rapporteurs. The Court welcomes the steps the Agency has made in order to address the issue of the evaluation of the costs and calls for further progress.

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This report was adopted by the Court of Auditors in Luxembourg at its meeting of 18 September 2008.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

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(1)  OJ L 214, 24.8.1993, p. 18 and OJ L 136, 30.4.2004, p. 1. Pursuant to the latter Regulation the Agency's original name, the European Agency for the Evaluation of Medicinal Products, was changed to the European Medicines Agency.

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(2)  OJ L 248, 16.9.2002, p. 1.

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(3)  These accounts were drawn up on 15 June 2008 and received by the Court on 1 July 2008.

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(4)  International Federation of Accountants (IFAC) and International Standards of Supreme Audit Institutions (ISSAI).

4

(5)  Two cases.

5

(6)  Three cases.

6

(7)  OJ C 309, 19.12.2007, p. 34.

7

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Table 1

European Medicines Agency (London)

| Areas of Community competence deriving from the Treaty | Competences of the Agency as defined in Regulation (EC) No 726/2004 of the European Parliament and of the Council | Governance | Resources made available to the Agency in 2007

  (Data for 2006) | Products and Services in 2007

  (Data for 2006) |
| --- | --- | --- | --- | --- |
| A high level of human health protection shall be ensured in the definition and implementation of all Community policies and activities.
  Community action, which shall complement national policies, shall be directed towards improving public health, preventing human illness and diseases and obviating sources of danger to human health. (...)

  (Article 152 of the Treaty) | Objectives







  — | To coordinate the scientific resources that the Member States' authorities make available to the Agency for the authorisation and supervision of medicinal products for human and veterinary use. |

Areas of Community competence deriving from the Treaty

Competences of the Agency as defined in Regulation (EC) No 726/2004 of the European Parliament and of the Council

Governance

Resources made available to the Agency in 2007

(Data for 2006)

Products and Services in 2007

(Data for 2006)

A high level of human health protection shall be ensured in the definition and implementation of all Community policies and activities.

Community action, which shall complement national policies, shall be directed towards improving public health, preventing human illness and diseases and obviating sources of danger to human health. (...)

(Article 152 of the Treaty)

Objectives

—

To coordinate the scientific resources that the Member States' authorities make available to the Agency for the authorisation and supervision of medicinal products for human and veterinary use.

| — | To provide the MemberStates and the institutions of the European Union with scientific advice on medicinal products for human or veterinary use. |
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—

To provide the MemberStates and the institutions of the European Union with scientific advice on medicinal products for human or veterinary use.

Tasks

| — | To coordinate the scientific evaluation of medicinal products which are subject to Community marketing authorisation procedures. |
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—

To coordinate the scientific evaluation of medicinal products which are subject to Community marketing authorisation procedures.

| — | To coordinate the supervision of medicinal products which have been authorised within the Community (pharmacovigilance). |
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—

To coordinate the supervision of medicinal products which have been authorised within the Community (pharmacovigilance).

| — | To advise on the maximum limits for residues of veterinary medicinal products which may be accepted in foodstuffs of animal origin. |
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—

To advise on the maximum limits for residues of veterinary medicinal products which may be accepted in foodstuffs of animal origin.

| — | To coordinate verification of compliance with the principles of good manufacturing practice, good laboratory practice and good clinical practice. |
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—

To coordinate verification of compliance with the principles of good manufacturing practice, good laboratory practice and good clinical practice.

| — | To record the status of marketing authorisations granted for medicinal products. |
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—

To record the status of marketing authorisations granted for medicinal products.

| 1. | The Committee for Medicinal Products for Human Use, consisting of one member and one alternate from each MemberState, advises on any question relating to the evaluation of medicinal products for human use. |
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1.

The Committee for Medicinal Products for Human Use, consisting of one member and one alternate from each MemberState, advises on any question relating to the evaluation of medicinal products for human use.

| 2. | The Committee for Medicinal Products for Veterinary Use, consisting of one member and one alternate from each MemberState, advises on any question relating to the evaluation of veterinary medicinal products. |
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2.

The Committee for Medicinal Products for Veterinary Use, consisting of one member and one alternate from each MemberState, advises on any question relating to the evaluation of veterinary medicinal products.

| 3. | The Committee for Orphan Medicinal Products, consisting of one member and one alternate from each MemberState, advises on any question relating to the evaluation of orphan medicinal products. |
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3.

The Committee for Orphan Medicinal Products, consisting of one member and one alternate from each MemberState, advises on any question relating to the evaluation of orphan medicinal products.

| 4. | The Committee on Herbal Medicinal Products, consisting of one member and one alternate from each MemberState, advises on any question relating to the evaluation of herbal medicinal products. |
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4.

The Committee on Herbal Medicinal Products, consisting of one member and one alternate from each MemberState, advises on any question relating to the evaluation of herbal medicinal products.

| 5. | The Paediatric Committee, consisting of five members with their alternates of the Committee for Medicinal Products for Human Use, one member and one alternate from each Member State, six members and alternates representing healthcare professionals and patients' associations, responsible for the scientific assessment and agreement of paediatric investigation plans and for the system of waivers and deferrals thereof. |
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5.

The Paediatric Committee, consisting of five members with their alternates of the Committee for Medicinal Products for Human Use, one member and one alternate from each Member State, six members and alternates representing healthcare professionals and patients' associations, responsible for the scientific assessment and agreement of paediatric investigation plans and for the system of waivers and deferrals thereof.

| 6. | The Management Board consists of one member and one alternate from each MemberState, two representatives of the Commission, two representatives appointed by the European Parliament, two representatives from patients' organisations, one representative from doctors' organisations and one representative from veterinarians' organisations. The Board adopts the work programme and the annual report. |
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6.

The Management Board consists of one member and one alternate from each MemberState, two representatives of the Commission, two representatives appointed by the European Parliament, two representatives from patients' organisations, one representative from doctors' organisations and one representative from veterinarians' organisations. The Board adopts the work programme and the annual report.

| 7. | The Executive Director is appointed by the Management Board on a proposal from the Commission. |
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7.

The Executive Director is appointed by the Management Board on a proposal from the Commission.

| 8. | External audit
  Court of Auditors. |
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8.

Court of Auditors.

| 9. | Discharge authority
  Parliament acting on recommendation of the Council. |
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9.

Parliament acting on recommendation of the Council.

Final budget for 2007:

163,1 million euro (138,7 million euro)

Community contribution (excluding subsidy for orphan medicines): 24,3 % (21,6 %)

Staff numbers at 31 December 2007:

441 (424) posts provided for in the establishment plan

Posts occupied: 422 (395)

95 (77) other staff (auxiliary agents, contract agents seconded national experts, employment agency staff)

Total staff:

518 (472)

Assigned to the following duties:

Operational: 444 (406)

Administrative: 74 (66)

Medicinal Products for Human Use

| — | Applications for marketing authorisations: 91 (79); |
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—

Applications for marketing authorisations: 91 (79);

| — | Favourable opinions: 58 (51); |
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—

Favourable opinions: 58 (51);

| — | Average evaluation time: 171 days (171 days); |
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—

Average evaluation time: 171 days (171 days);

| — | Opinions after authorisation: 1 899 (1 380); |
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Opinions after authorisation: 1 899 (1 380);

| — | Pharmacovigilance: 150 188 reports (94 081 reports); |
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—

Pharmacovigilance: 150 188 reports (94 081 reports);

| — | Periodic safety update reports: 313 (273); |
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—

Periodic safety update reports: 313 (273);

| — | Scientific opinions: 215 (193); |
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—

Scientific opinions: 215 (193);

| — | Procedures for mutual recognition: 10 932 (9 241); |
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—

Procedures for mutual recognition: 10 932 (9 241);

| — | Applications for paediatric investigation plans: 85 (0) relating to 202 (0) indications. |
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—

Applications for paediatric investigation plans: 85 (0) relating to 202 (0) indications.

Medicinal Products for Veterinary Use

| — | New applications: 14 (5); |
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—

New applications: 14 (5);

| — | Applications in respect of variants: 100 (56); |
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—

Applications in respect of variants: 100 (56);

| — | Inspections: 185 (128). |
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—

Inspections: 185 (128).

Orphan Medicinal Products

| — | Applications: 125 (104); |
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—

Applications: 125 (104);

| — | Favourable opinions: 97 (81). |
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—

Favourable opinions: 97 (81).

SMEs

| — | Requests for SME status 212 (145); |
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—

Requests for SME status 212 (145);

| — | Applications for fee reduction or deferrals 81. |
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Applications for fee reduction or deferrals 81.

Source: Information supplied by the Agency.

Table 2

European Medicines Agency (London) — Implementation of the budget for the financial year 2007

| (1000 euro) |
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| Revenue | Expenditure |
| Source of revenue | Revenue entered in the final budget for the financial year | Revenue collected | Allocation of expenditure | Final budget appropriations | Appropriations carried over from previous year(s) |
| entered | committed | paid | carried over | cancelled | entered | paid | cancelled |
| Own revenue | 113 659 | 116 799 | Title I
  Staff | 51 132 | 49 871 | 49 107 | 764 | 1 261 | 767 | 661 | 106 |
| Community subsidies | 40 548 | 40 548 |
| Other subsidies | 6 706 | 5 475 | Title II
  Administration | 47 198 | 44 758 | 25 863 | 18 895 | 2 440 | 15 061 | 14 360 | 701 |
| Other revenue | 2 200 | 2 467 | Title III
  Operating activities | 64 783 | 64 497 | 52 118 | 12 379 | 286 | 13 585 | 13 257 | 328 |
| Total | 163 113 | 165 289 | Total | 163 113 | 159 126 | 127 088 | 32 038 | 3 987 | 29 413 | 28 278 | 1 135 |
| NB: Any discrepancies in totals are due to the effects of rounding.

  Source: Data supplied by the Agency. This table summarises the data provided by the Agency in its annual accounts. Revenue collected and payments are estimated on a cash basis. |

(1000 euro)

Revenue

Expenditure

Source of revenue

Revenue entered in the final budget for the financial year

Revenue collected

Allocation of expenditure

Final budget appropriations

Appropriations carried over from previous year(s)

entered

committed

paid

carried over

cancelled

entered

paid

cancelled

Own revenue

113 659

116 799

Title I

Staff

51 132

49 871

49 107

764

1 261

767

661

106

Community subsidies

40 548

40 548

Other subsidies

6 706

5 475

Title II

Administration

47 198

44 758

25 863

18 895

2 440

15 061

14 360

701

Other revenue

2 200

2 467

Title III

Operating activities

64 783

64 497

52 118

12 379

286

13 585

13 257

328

Total

163 113

165 289

Total

163 113

159 126

127 088

32 038

3 987

29 413

28 278

1 135

NB: Any discrepancies in totals are due to the effects of rounding.

Source: Data supplied by the Agency. This table summarises the data provided by the Agency in its annual accounts. Revenue collected and payments are estimated on a cash basis.

Table 3

European Medicines Agency (London) — Economic outturn account for the financial years 2007 and 2006

| (1000 euro) |
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| | 2007 | 2006 |
| Operating revenue |
| Fees and other revenue | 120 305 | 119 039 |
| Community subsidies | 41 144 | 31 503 |
| Total (a) | 161 449 | 150 542 |
| Operating expenses |
| Staff expenses | 50 165 | 45 150 |
| Other administrative expenses | 33 513 | 26 607 |
| Operational expenses | 67 402 | 63 437 |
| Total (b) | 151 080 | 135 194 |
| Surplus/(deficit) from operating activities (c = a – b) | 10 369 | 15 348 |
| Financial operations revenue (e) | –1 188 | 1 433 |
| Surplus/(deficit) from non-operating activities (f = e) | –1 188 | 1 433 |
| Economic result for the year (g = c + f) | 9 181 | 16 781 |
| Source: Data supplied by the Agency. This table summarises the data provided by the Agency in its annual accounts. |

(1000 euro)

2007

2006

Operating revenue

Fees and other revenue

120 305

119 039

Community subsidies

41 144

31 503

Total (a)

161 449

150 542

Operating expenses

Staff expenses

50 165

45 150

Other administrative expenses

33 513

26 607

Operational expenses

67 402

63 437

Total (b)

151 080

135 194

Surplus/(deficit) from operating activities (c = a – b)

10 369

15 348

Financial operations revenue (e)

–1 188

1 433

Surplus/(deficit) from non-operating activities (f = e)

–1 188

1 433

Economic result for the year (g = c + f)

9 181

16 781

Source: Data supplied by the Agency. This table summarises the data provided by the Agency in its annual accounts.

Table 4

European Medicines Agency (London) — Balance sheet at 31 December 2007 and 2006

| (1000 euro) |
| --- |
| | 2007 | 2006 |
| Non-current assets |
| Intangible fixed assets | 17 973 | 14 889 |
| Tangible fixed assets | 12 673 | 6 695 |
| Current assets |
| Short-term receivables | 32 036 | 26 045 |
| Cash and cash equivalents | 34 318 | 37 508 |
| Total assets | 97 000 | 85 138 |
| Current liabilities |
| Provisions for risks and charges | 2 909 | 2 699 |
| Accounts payable | 41 021 | 38 550 |
| Total liabilities | 43 930 | 41 249 |
| Net assets | 53 070 | 43 889 |
| Reserves |
| Accumulated surplus/deficit | 43 889 | 27 109 |
| Economic result for the year | 9 181 | 16 781 |
| Net capital | 53 070 | 43 889 |
| Source: Data supplied by the Agency. This table summarises the data provided by the Agency in its annual accounts. |

(1000 euro)

2007

2006

Non-current assets

Intangible fixed assets

17 973

14 889

Tangible fixed assets

12 673

6 695

Current assets

Short-term receivables

32 036

26 045

Cash and cash equivalents

34 318

37 508

Total assets

97 000

85 138

Current liabilities

Provisions for risks and charges

2 909

2 699

Accounts payable

41 021

38 550

Total liabilities

43 930

41 249

Net assets

53 070

43 889

Reserves

Accumulated surplus/deficit

43 889

27 109

Economic result for the year

9 181

16 781

Net capital

53 070

43 889

Source: Data supplied by the Agency. This table summarises the data provided by the Agency in its annual accounts.

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THE AGENCY'S REPLIES

| 7. | The Agency takes note of the Court's observations. Reference is made to the particular difficulties in complying fully with the annuality principle when it comes to the implementation of multi-annual and multinational Telematics programmes, and also, to strictly observe the requirements of sound financial management. The Agency commits itself to make every effort to reduce the level of carry-overs and to consider the proposal of applying differentiated appropriations. |
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7.

The Agency takes note of the Court's observations. Reference is made to the particular difficulties in complying fully with the annuality principle when it comes to the implementation of multi-annual and multinational Telematics programmes, and also, to strictly observe the requirements of sound financial management. The Agency commits itself to make every effort to reduce the level of carry-overs and to consider the proposal of applying differentiated appropriations.

| 8. | The Agency has established a formula for the objective evaluation of price as an award criteria, with effect from 17 March 2008.
  In the case of the joint public procurement procedure with five other agencies, the original estimate had to be revalued due to the technological advances that occurred between the definition of the services to be provided and the effective launch of the procurement procedure. The Agency commits itself to make every effort to increase the quality of its public procurement procedures. |
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8.

The Agency has established a formula for the objective evaluation of price as an award criteria, with effect from 17 March 2008.

In the case of the joint public procurement procedure with five other agencies, the original estimate had to be revalued due to the technological advances that occurred between the definition of the services to be provided and the effective launch of the procurement procedure. The Agency commits itself to make every effort to increase the quality of its public procurement procedures.

| 9. | The Agency notes that the Court welcomes the progress the Agency has made. At its meeting of 12 June 2008 the Management Board endorsed the proposal to implement a pilot phase in order to introduce a new remuneration system for (co)rapporteurs after the pilot phase by the end of 2009. |
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9.

The Agency notes that the Court welcomes the progress the Agency has made. At its meeting of 12 June 2008 the Management Board endorsed the proposal to implement a pilot phase in order to introduce a new remuneration system for (co)rapporteurs after the pilot phase by the end of 2009.

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