# C_2007309EN.01003401.xml

| 19.12.2007 | EN | Official Journal of the European Union | C 309/34 |
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19.12.2007

EN

Official Journal of the European Union

C 309/34

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REPORT

REPORT

on the annual accounts of the European Medicines Agency for the financial year 2006 together with the Agency's replies

(2007/C 309/07)

CONTENTS

| 1-2 | INTRODUCTION |
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1-2

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

| 7-8 | OBSERVATIONS |
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7-8

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 2006 is presented inTables 2, 3 and 4 for 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 2006 is presented inTables 2, 3 and 4 for 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 2006 (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 2006 (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.

3

| 5. | The Court conducted its audit in accordance with the IFAC and INTOSAI 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 INTOSAI 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.

| 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 2006 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 2006 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 2006 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. | As regards the implementation of the budget for administrative expenditure (Title II), the utilisation rate for commitment appropriations was less than 60 %. More than 40 % of the commitments, in particular in the area of Information Technology, were carried over to the financial year 2007. Thus, the budgetary principle of annuality was not strictly observed. |
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7.

As regards the implementation of the budget for administrative expenditure (Title II), the utilisation rate for commitment appropriations was less than 60 %. More than 40 % of the commitments, in particular in the area of Information Technology, were carried over to the financial year 2007. Thus, the budgetary principle of annuality was not strictly observed.

| 8. | Article 12(4) of the Fee Regulation (4) states ‘Any review of the fees shall be based on an evaluation of the Agency's costs and on the basis of the related costs of the services provided for by the Member States. Those costs shall be calculated in accordance with generally accepted international costing methods, which shall be adopted in accordance with Article 11(2).’ Up to now, the Agency's customers are billed an amount which is divided into two parts: one part covers the Agency's costs and the other is repaid to the Member States' rapporteurs to cover their own. As the Member States' rapporteurs did never provide full evidence or documentation of their real costs, this situation was in breach of the Fee Regulation. The Agency has not been in a position to make a comprehensive analysis of the costs incurred by Member States' rapporteurs in order to obtain an objective and documented basis on which to adapt its payments to them and, consequently, the fees charged to its customers. |
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8.

Article 12(4) of the Fee Regulation (4) states ‘Any review of the fees shall be based on an evaluation of the Agency's costs and on the basis of the related costs of the services provided for by the Member States. Those costs shall be calculated in accordance with generally accepted international costing methods, which shall be adopted in accordance with Article 11(2).’ Up to now, the Agency's customers are billed an amount which is divided into two parts: one part covers the Agency's costs and the other is repaid to the Member States' rapporteurs to cover their own. As the Member States' rapporteurs did never provide full evidence or documentation of their real costs, this situation was in breach of the Fee Regulation. The Agency has not been in a position to make a comprehensive analysis of the costs incurred by Member States' rapporteurs in order to obtain an objective and documented basis on which to adapt its payments to them and, consequently, the fees charged to its customers.

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This report was adopted by the Court of Auditors in Luxembourg at its meeting of 27 September 2007.

For the Court of Auditors

Hubert WEBER

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.

1

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

2

(3)  These accounts were drawn up on 21 June 2007 and received by the Court on 17 July 2007.

3

(4)  As amended by Council Regulation (EC) No 1905/2005 amending Council Regulation (EC) No 297/95 (OJ L 304, 23.11.2005, p. 1).

4

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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 and Regulation (EC) No 141/2000 | Governance | Resources made available to the Agency in 2006

  (2005) | Products and Services in 2006

  (2005) |
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| 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 and Regulation (EC) No 141/2000

Governance

Resources made available to the Agency in 2006

(2005)

Products and Services in 2006

(2005)

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 Member States 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 Member States 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 Member State, 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 Member State, 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 Member State, 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 Member State, 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 Member State, 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 Member State, 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 Member State, 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 Member State, advises on any question relating to the evaluation of herbal medicinal products.

| 5. | The Management Board consists of one member and one alternate from each Member State, 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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5.

The Management Board consists of one member and one alternate from each Member State, 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.

| 6. | The Executive Director is appointed by the Management Board on a proposal from the Commission. |
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6.

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

| 7. | External audit: European Court of Auditors |
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7.

External audit: European Court of Auditors

| 8. | Discharge authority: Parliament on a recommendation from the Council. |
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8.

Discharge authority: Parliament on a recommendation from the Council.

Final budget for 2006:

138,7 (111,8) million euro

Community contribution (excluding subsidy for orphan medicines): 21,63 % (22,7 %)

Staff numbers at 31 December 2006:

424 (379) posts provided for in the establishment plan

Posts occupied: 395 (337,5)

+77 (34) other staff (auxiliary staff, contract staff, seconded national experts, employment-agency staff)

Total staff: 472 (371,5)

Assigned to the following duties:

| — | Operational: 406 (302,5) |
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—

Operational: 406 (302,5)

| — | Administrative: 66 (69) |
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Administrative: 66 (69)

Medicinal Products for Human Use

| — | Applications for marketing authorisations: 79 (43) |
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—

Applications for marketing authorisations: 79 (43)

| — | Favourable opinions: 51 (24) |
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—

Favourable opinions: 51 (24)

| — | Average evaluation time: 171 days (203 days) |
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—

Average evaluation time: 171 days (203 days)

| — | Opinions after authorisation: 1 380 (1 148) |
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Opinions after authorisation: 1 380 (1 148)

| — | Pharmacovigilance: 94 081 reports (91 565 reports) |
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—

Pharmacovigilance: 94 081 reports (91 565 reports)

| — | Periodic safety update reports: 273 (279) |
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—

Periodic safety update reports: 273 (279)

| — | Scientific opinions: 193 (135) |
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—

Scientific opinions: 193 (135)

| — | Procedures for mutual recognition: 9 241 (8 451) |
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—

Procedures for mutual recognition: 9 241 (8 451)

Medicinal Products for Veterinary Use

| — | New applications: 5 (11) |
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—

New applications: 5 (11)

| — | Applications in respect of variants: 56 (40) |
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—

Applications in respect of variants: 56 (40)

| — | Inspections: 128 (114) |
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—

Inspections: 128 (114)

Orphan Medicinal Products

| — | Applications: 104 (118) |
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—

Applications: 104 (118)

| — | Favourable opinions: 81 (88) |
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—

Favourable opinions: 81 (88)

Source: Information supplied by the Agency.

Source: Data supplied by the Agency. This table summarises the data provided by the Agency in its annual accounts: these accounts are drawn up on an accrual basis.

Table 2

European Medicines Agency (London) — Implementation of the budget for the financial year 2006

| (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 | 92 580 | 94 556 | Title I
  Staff | 44 921 | 43 709 | 42 941 | 768 | 1 212 | 700 | 563 | 136 |
| Community subsidies | 30 650 | 32 551 |
| Other subsidies | 8 160 | 7 374 | Title II
  Administration | 34 454 | 34 007 | 18 946 | 15 061 | 447 | 10 041 | 8 535 | 1 505 |
| Other revenue | 7 286 | 6 820 | Title III
  Operating activities | 59 301 | 58 431 | 44 846 | 13 585 | 870 | 8 092 | 7 603 | 490 |
| Total | 138 676 | 141 301 | Total | 138 676 | 136 147 | 106 733 | 29 414 | 2 529 | 18 833 | 16 701 | 2 131 |
| 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

92 580

94 556

Title I

Staff

44 921

43 709

42 941

768

1 212

700

563

136

Community subsidies

30 650

32 551

Other subsidies

8 160

7 374

Title II

Administration

34 454

34 007

18 946

15 061

447

10 041

8 535

1 505

Other revenue

7 286

6 820

Title III

Operating activities

59 301

58 431

44 846

13 585

870

8 092

7 603

490

Total

138 676

141 301

Total

138 676

136 147

106 733

29 414

2 529

18 833

16 701

2 131

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 2006 and 2005

| (1000 euro) |
| --- |
| | 2006 | 2005 (1) |
| Operating revenue |
| Fees and other revenue | 119 039 | 72 979 |
| Community subsidies | 31 503 | 28 957 |
| Total (a) | 150 542 | 101 936 |
| Operating expenses |
| Staff expenses | 45 150 | 40 057 |
| Other administrative expenses | 26 607 | 22 459 |
| Operational expenses | 63 437 | 37 849 |
| Total (b) | 135 194 | 100 365 |
| Surplus/(deficit) from operating activities (c = a – b) | 15 348 | 1 571 |
| Financial operations revenue (e) | 1 433 | 2 257 |
| Surplus/(deficit) from non-operating activities (f = e) | 1 433 | 2 257 |
| Economic result for the year (g = c + f) | 16 781 | 3 828 |

(1000 euro)

2006

2005 (1)

Operating revenue

Fees and other revenue

119 039

72 979

Community subsidies

31 503

28 957

Total (a)

150 542

101 936

Operating expenses

Staff expenses

45 150

40 057

Other administrative expenses

26 607

22 459

Operational expenses

63 437

37 849

Total (b)

135 194

100 365

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

15 348

1 571

Financial operations revenue (e)

1 433

2 257

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

1 433

2 257

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

16 781

3 828

Table 4

European Medicines Agency (London) — Balance sheet at 31 December 2006 and 2005

| (1000 euro) |
| --- |
| | 2006 | 2005 (1) |
| Non-current assets |
| Intangible fixed assets | 14 889 | 10 492 |
| Tangible fixed assets | 6 695 | 6 945 |
| Current assets |
| Short-term receivables | 26 045 | 14 490 |
| Cash and cash equivalents | 37 508 | 29 934 |
| Total assets | 85 138 | 61 861 |
| Current liabilities |
| Provisions for risks and charges | 2 699 | 1 214 |
| Accounts payable | 38 550 | 33 539 |
| Total liabilities | 41 249 | 34 753 |
| Net assets |
| Accumulated surplus/deficit | 27 108 | 23 280 |
| Economic result for the year | 16 781 | 3 828 |
| Total net assets | 43 889 | 27 108 |
| Total liabilities and net assets | 85 138 | 61 861 |

(1000 euro)

2006

2005 (1)

Non-current assets

Intangible fixed assets

14 889

10 492

Tangible fixed assets

6 695

6 945

Current assets

Short-term receivables

26 045

14 490

Cash and cash equivalents

37 508

29 934

Total assets

85 138

61 861

Current liabilities

Provisions for risks and charges

2 699

1 214

Accounts payable

38 550

33 539

Total liabilities

41 249

34 753

Net assets

Accumulated surplus/deficit

27 108

23 280

Economic result for the year

16 781

3 828

Total net assets

43 889

27 108

Total liabilities and net assets

85 138

61 861

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(1)  For the 2005 published accounts, the accrual accounting had not been fully implemented.

Source: Data supplied by the Agency. This table summarises the data provided by the Agency in its annual accounts: these accounts are drawn up on an accrual basis.

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THE AGENCY'S REPLIES

| 7. | The total automatic carry over to 2007 on Title 2 amounted to 15 million euro, of which 8 million euro was for Information Technology (Chapter 21). The Agency is in the process to develop and implement a multi-annual programme of EU Telematics for the regulation of medicinal products. The governance process and the nature of the projects makes it dificult to strictly observe the annuality principle, especially as many governance steps are outside the control of the EMEA. Every effort is made to bring down the level of automatic carry overs in the future. |
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7.

The total automatic carry over to 2007 on Title 2 amounted to 15 million euro, of which 8 million euro was for Information Technology (Chapter 21). The Agency is in the process to develop and implement a multi-annual programme of EU Telematics for the regulation of medicinal products. The governance process and the nature of the projects makes it dificult to strictly observe the annuality principle, especially as many governance steps are outside the control of the EMEA. Every effort is made to bring down the level of automatic carry overs in the future.

| 8. | The Agency has together with the national competent authorities made long efforts to assess the costs incurred by the Member States' rapporteurs. At its December 2006 meeting the Management Board of the agency ‘took the decision in principle to revise the scale of fees system’ and decided to establish a costing group in order to ‘... to prepare and agree on generally accepted international costing methods referred to in Article 12 of the fee Regulation ... Representatives from all national competent authorities will be invited to participate in this work.’ |
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8.

The Agency has together with the national competent authorities made long efforts to assess the costs incurred by the Member States' rapporteurs. At its December 2006 meeting the Management Board of the agency ‘took the decision in principle to revise the scale of fees system’ and decided to establish a costing group in order to ‘... to prepare and agree on generally accepted international costing methods referred to in Article 12 of the fee Regulation ... Representatives from all national competent authorities will be invited to participate in this work.’

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