# C_2010338EN.01002801.xml

| 14.12.2010 | EN | Official Journal of the European Union | C 338/28 |
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14.12.2010

EN

Official Journal of the European Union

C 338/28

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REPORT

on the annual accounts of the European Medicines Agency for the financial year 2009, together with the Agency’s replies

2010/C 338/06

CONTENTS

CONTENTS

| | Paragraph | Page |
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| INTRODUCTION ... | 1-2 | 29 |
| STATEMENT OF ASSURANCE ... | 3-16 | 29 |
| COMMENTS ON THE BUDGETARY AND FINANCIAL MANAGEMENT ... | 17-19 | 30 |
| Table ... | 31 |
| The Agency’s replies ... | 33 |

Paragraph

Paragraph

Page

Page

INTRODUCTION ...

1-2

29

STATEMENT OF ASSURANCE ...

3-16

29

COMMENTS ON THE BUDGETARY AND FINANCIAL MANAGEMENT ...

17-19

30

Table ...

31

The Agency’s replies ...

The Agency’s replies

33

INTRODUCTION

INTRODUCTION

| 1. | The European Medicines Agency (hereinafter ‘the Agency’), located in London, 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 (2). |
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1.

The European Medicines Agency (hereinafter ‘the Agency’), located in London, 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 (2).

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| 2. | The Agency’s 2009 budget amounted to 194,4 million euro, compared with 182,9 million euro the previous year. The number of staff employed by the Agency at the end of the year was 664, as compared with 587 in the previous year. |
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2.

The Agency’s 2009 budget amounted to 194,4 million euro, compared with 182,9 million euro the previous year. The number of staff employed by the Agency at the end of the year was 664, as compared with 587 in the previous year.

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| 16. | The comments which follow do not call the Court’s opinions into question. |
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The comments which follow do not call the Court’s opinions into question.

COMMENTS ON THE BUDGETARY AND FINANCIAL MANAGEMENT

COMMENTS ON THE BUDGETARY AND FINANCIAL MANAGEMENT

| 17. | For Title II — Buildings, equipment and miscellaneous operating expenditure activities, 19,5 million euro or 38 % of the commitments made were carried forward to the budgetary year 2010. According to the accounting information, approximately 14,8 million euro of the appropriations carried forward corresponded to activities not yet implemented (or in some cases goods not received) at the year-end. This situation indicated delays in the implementation of the activities financed from Title II of the Agency’s budget and was not in keeping with the budgetary principle of annuality. |
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17.

For Title II — Buildings, equipment and miscellaneous operating expenditure activities, 19,5 million euro or 38 % of the commitments made were carried forward to the budgetary year 2010. According to the accounting information, approximately 14,8 million euro of the appropriations carried forward corresponded to activities not yet implemented (or in some cases goods not received) at the year-end. This situation indicated delays in the implementation of the activities financed from Title II of the Agency’s budget and was not in keeping with the budgetary principle of annuality.

| 18. | As regards own revenue, two recovery orders (226 200 euro and 110 200 euro), out of 10 tested, were issued with a very long delay (21 and 5 months respectively), in breach of the Agency’s internal rules. This was due to a lack of coordination between the financial and scientific services. |
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18.

As regards own revenue, two recovery orders (226 200 euro and 110 200 euro), out of 10 tested, were issued with a very long delay (21 and 5 months respectively), in breach of the Agency’s internal rules. This was due to a lack of coordination between the financial and scientific services.

| 19. | As noted by the Court in its 2008 Specific Annual Report (16), the Agency has had a long-standing policy of entering into forward foreign-exchange contracts in order to hedge part (50 %) of its administrative budget against unfavourable fluctuations in the exchange rate for Sterling. In 2009, the total foreign exchange loss recognised in the economic outturn account was 0,9 million euro. The Agency should consider reassessing its treasury policy in the light of the losses and risks incurred. |
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19.

As noted by the Court in its 2008 Specific Annual Report (16), the Agency has had a long-standing policy of entering into forward foreign-exchange contracts in order to hedge part (50 %) of its administrative budget against unfavourable fluctuations in the exchange rate for Sterling. In 2009, the total foreign exchange loss recognised in the economic outturn account was 0,9 million euro. The Agency should consider reassessing its treasury policy in the light of the losses and risks incurred.

16

This Report was adopted by Chamber IV, headed by Mr Igors LUDBORŽS, Member of the Court of Auditors, in Luxembourg at its meeting of 5 October 2010.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

Table

European Medicines Agency (London)

| Areas of Union competence deriving from the Treaty | Competences of the Agency
  (Regulation (EC) No 726/2004 of the Parliament and of the Council) | Governance | Resources made available to the Agency in 2009

  (Data for 2008) | Products and services in 2009
  (Data for 2008) |
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| A high level of human health protection shall be ensured in the definition and implementation of all Union policies and activities.
  Union action, which shall complement national policies, shall be directed towards improving public health, preventing physical and mental illness and diseases, and obviating sources of danger to physical and mental health. Such action shall cover the fight against the major health scourges, by promoting research into their causes, their transmission and their prevention, as well as health information and education, and monitoring, early warning of and combating serious cross-border threats to health.

  (Article 168 of the TFEU) | 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 Union competence deriving from the Treaty

Competences of the Agency

(Regulation (EC) No 726/2004 of the Parliament and of the Council)

Governance

Resources made available to the Agency in 2009

(Data for 2008)

Products and services in 2009

(Data for 2008)

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

Union action, which shall complement national policies, shall be directed towards improving public health, preventing physical and mental illness and diseases, and obviating sources of danger to physical and mental health. Such action shall cover the fight against the major health scourges, by promoting research into their causes, their transmission and their prevention, as well as health information and education, and monitoring, early warning of and combating serious cross-border threats to health.

(Article 168 of the TFEU)

Objectives

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

| — | To coordinate the supervision of medicinal products which have been authorised within the Union (pharmaco-vigilance). |
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To coordinate the supervision of medicinal products which have been authorised within the Union (pharmaco-vigilance).

| — | 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 (CHMP), consisting of one member and one alternate from each Member State and 5 coopted members, advises on any question relating to the evaluation of medicinal products for human use.

2 —   The Committee for Medicinal Products for Veterinary Use (CVMP), 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 (COMP), 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 (HMPC), consisting of one member and one alternate from each Member State and 5 coopted members, advises on any question relating to the evaluation of herbal medicinal products.

5 —   The Paediatric Committee (PDCO), consisting of one member and one alternate from each Member State, six members and alternates representing healthcare professionals and patients’ associations, is responsible for the scientific assessment and agreement of paediatric investigation plans and for the system of waivers and deferrals thereof.

6 —   The Committee for Advanced Therapy (CAT), consisting of five members of CHMP and their (five) alternates, one member and one alternate from each Member State, two members and two alternates representing clinicians, two members and two alternates representing patients’ associations, is responsible for any question relating to the assessment of advanced therapy medicinal products and ATMP certification and classification.

7 —   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.

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

9 —   Internal audit

Internal Audit Service of the Commission.

10 —   External audit

Court of Auditors.

11 —   Discharge authority

Parliament, acting on a recommendation from the Council.

Budget

194,389 million euro (182,895 million euro);

Union contribution: 18,7 % (18,8 %)

Staff at 31 December 2009

Posts provided for in the establishment plan: 530 (481)

Posts occupied:

511 (469)

160 (104) other staff (contract staff, seconded national experts, employment agency staff)

Total staff: 664 (587)

Allocated to:

Operational:

520 (483)

Administrative:

144 (104)

Medicinal Products for Human Use

| — | Applications for marketing authorisations: 96 (103) |
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Applications for marketing authorisations: 96 (103)

| — | Favourable opinions: 117 (68) |
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Favourable opinions: 117 (68)

| — | Average evaluation time: 157 days (184 days) |
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Average evaluation time: 157 days (184 days)

| — | Opinions after authorisation: 2 396(2 122) |
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Opinions after authorisation: 2 396(2 122)

| — | Pharmaco-vigilance (CAP EEA and non-EEA ADR reports): 252 117 reports (193 587 reports) |
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Pharmaco-vigilance (CAP EEA and non-EEA ADR reports): 252 117 reports (193 587 reports)

| — | Periodic safety update reports: 425 (391) |
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Periodic safety update reports: 425 (391)

| — | Scientific advice finalised: 308 (263) |
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Scientific advice finalised: 308 (263)

| — | Mutual Recognition Procedures and Decentralised Procedures: started 16 307 (14 522); ended positively 15 335 (12 681) |
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Mutual Recognition Procedures and Decentralised Procedures: started 16 307 (14 522); ended positively 15 335 (12 681)

| — | Applications for paediatric investigation plans: 273 (271) relating to 364 (395) indications |
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Applications for paediatric investigation plans: 273 (271) relating to 364 (395) indications

Medicinal Products for Veterinary Use

| — | Applications for marketing authorisations: 15 (16) |
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Applications for marketing authorisations: 15 (16)

| — | Applications in respect of variants: 113 (100) |
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Applications in respect of variants: 113 (100)

| — | Inspections: 233 (253) |
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Inspections: 233 (253)

Herbal Medicinal Products

Herbal monographs: 17 (17)

List of herbal substances, preparations and combination thereof: 0 (5)

Orphan Medicinal Products

| — | Applications: 164 (119) |
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Applications: 164 (119)

| — | Favourable opinions: 113 (86) |
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Favourable opinions: 113 (86)

SMEs

| — | Requests for SME status 217 (242) |
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Requests for SME status 217 (242)

| — | Applications for fee reduction or deferrals 80 (84) |
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Applications for fee reduction or deferrals 80 (84)

Source: Information supplied by the Agency.

THE AGENCY’S REPLIES

| 11. | Considering the high number and complexity of tender procedures, notably in the IT area, which lies at the root of the errors noted by the Court and in an effort to organise tender procedures in a more consistent way, the agency will set up a multiannual procurement plan and will also ensure stronger technical and procedural controls. In EMA’s view, the errors affecting the regularity of the procedures in no case led to financial disadvantages. |
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11.

Considering the high number and complexity of tender procedures, notably in the IT area, which lies at the root of the errors noted by the Court and in an effort to organise tender procedures in a more consistent way, the agency will set up a multiannual procurement plan and will also ensure stronger technical and procedural controls. In EMA’s view, the errors affecting the regularity of the procedures in no case led to financial disadvantages.

| 12. | For this highly complex procedure a comprehensive and detailed evaluation guide was used in a draft form by all members of the evaluation committee. This guide was used as a pilot exercise and appears not to have been applied in a strict manner on all occasions. The Agency acknowledges that there was an error in the final marks resulting from the evaluation.
  The result of the negotiated procedure was the award of framework contracts in the same order of cascade as the bidders had been ranked in the open procedure. However, both tenders had been substantially improved with regard to quality and the average of prices.
  In view of the findings of the Court, the Agency will ensure that the results of procurement procedures are verified before contracts are awarded. |
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12.

For this highly complex procedure a comprehensive and detailed evaluation guide was used in a draft form by all members of the evaluation committee. This guide was used as a pilot exercise and appears not to have been applied in a strict manner on all occasions. The Agency acknowledges that there was an error in the final marks resulting from the evaluation.

The result of the negotiated procedure was the award of framework contracts in the same order of cascade as the bidders had been ranked in the open procedure. However, both tenders had been substantially improved with regard to quality and the average of prices.

In view of the findings of the Court, the Agency will ensure that the results of procurement procedures are verified before contracts are awarded.

| 13. | As was the case for the procedure mentioned in paragraph 12 above, a comprehensive and detailed evaluation guide was used in draft form by all members of the evaluation committee. This guide was also used as a part of a pilot exercise. Experience with this draft evaluation guide showed that it was too strict leading to unreasonably low marks.
  With the benefit of hindsight, given the volume of the contracts concerned, it would have been better to pilot the evaluation guide with a smaller procurement transaction.
  The conclusions were based on a consistent and objective assessment of the tenders received by the evaluation committee. The Agency acknowledges however, that the report of the evaluation committee was unclear regarding the way the selection criteria had been assessed.
  Improvement actions have been initiated to avoid a recurrence of such problems. |
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13.

As was the case for the procedure mentioned in paragraph 12 above, a comprehensive and detailed evaluation guide was used in draft form by all members of the evaluation committee. This guide was also used as a part of a pilot exercise. Experience with this draft evaluation guide showed that it was too strict leading to unreasonably low marks.

With the benefit of hindsight, given the volume of the contracts concerned, it would have been better to pilot the evaluation guide with a smaller procurement transaction.

The conclusions were based on a consistent and objective assessment of the tenders received by the evaluation committee. The Agency acknowledges however, that the report of the evaluation committee was unclear regarding the way the selection criteria had been assessed.

Improvement actions have been initiated to avoid a recurrence of such problems.

| 14. | The procurements were necessary for the continuation of services and the maintenance and acquisition of goods because the existing framework contracts were due to expire. There was no alternative to negotiated procedures for technical reasons. The principal objective for negotiation was to bring down the prices for existing goods and services. During the negotiation process the Agency achieved substantial reductions in prices in comparison to the previous framework contracts for some of the products concerned. In view of the findings of the Court, the Agency will ensure that detailed technical specifications are always prepared. |
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14.

The procurements were necessary for the continuation of services and the maintenance and acquisition of goods because the existing framework contracts were due to expire. There was no alternative to negotiated procedures for technical reasons. The principal objective for negotiation was to bring down the prices for existing goods and services. During the negotiation process the Agency achieved substantial reductions in prices in comparison to the previous framework contracts for some of the products concerned. In view of the findings of the Court, the Agency will ensure that detailed technical specifications are always prepared.

| 17. | Following the Courts’ observations on financial year 2006, the Agency had reviewed its financial commitments carried over especially within Title II. Consequently, for several multiannual contracts that expired since 2007, the duration was amended with the aim of starting contracts in the first quarter of a financial year. The Agency has continued to make significant efforts to reduce its carry-overs. Taking account of the growth in overall budget, in relative terms the carry-over in Title II decreased from 42,6 % (2008 to 2009) to 38,1 % (2009 to 2010). The Agency will continue reducing the carry-overs of appropriations with a further decline expected for the carry-over from 2010 to 2011. |
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17.

Following the Courts’ observations on financial year 2006, the Agency had reviewed its financial commitments carried over especially within Title II. Consequently, for several multiannual contracts that expired since 2007, the duration was amended with the aim of starting contracts in the first quarter of a financial year. The Agency has continued to make significant efforts to reduce its carry-overs. Taking account of the growth in overall budget, in relative terms the carry-over in Title II decreased from 42,6 % (2008 to 2009) to 38,1 % (2009 to 2010). The Agency will continue reducing the carry-overs of appropriations with a further decline expected for the carry-over from 2010 to 2011.

| 18. | Temporary control measures have been put in place pending the new financial database SAP’s ability to automatically create and update fee data from the operational database once validation of applications is completed.
  This will immediately flag delays occurring after the scientific operational processes and before the financial initiation of fee recovery. |
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18.

Temporary control measures have been put in place pending the new financial database SAP’s ability to automatically create and update fee data from the operational database once validation of applications is completed.

This will immediately flag delays occurring after the scientific operational processes and before the financial initiation of fee recovery.

| 19. | The treasury policy has been revised, adopted and formally approved by the agency’s Audit Advisory Committee. |
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19.

The treasury policy has been revised, adopted and formally approved by the agency’s Audit Advisory Committee.

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(1)  OJ L 214, 24.8.1993, p. 1 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)  The Table summarises the Agency's competences and activities. It is presented for information purposes.

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(3)  These accounts are accompanied by a report on the budgetary and financial management during the year which gives inter alia an account of the rate of implementation of the appropriations with summary information on the transfers of appropriations among the various budget items.

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(4)  The financial statements include the balance sheet and the economic outturn account, the cash-flow table, the statement of changes in capital and the annex to the financial statements which includes the description of the significant accounting policies and other explanatory information.

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(5)  The budget implementation reports comprise the budget outturn account and its annex.

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

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(7)  Article 33 of Commission Regulation (EC, Euratom) No 2343/2002 of 19 November 2002 (OJ L 357, 31.12.2002, p. 72).

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(8)  Article 38 of Regulation (EC, Euratom) No 2343/2002.

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(9)  The rules concerning the presentation of the accounts and accounting by the Agencies are laid down in chapter 1 of Title VII of Regulation (EC, Euratom) No 2343/2002 as last amended by Regulation (EC, Euratom) No 652/2008 of 9 July 2008 (OJ L 181, 10.7.2008, p. 23) and are integrated as such in the Financial Regulation of the Agency.

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

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(11)  The Final Annual Accounts were drawn up on 30 June 2010 and received by the Court on 30 June 2010. The Final Annual Accounts, consolidated with those of the Commission, are published in the Official Journal of the European Union by 15 November of the following year. These can be found on the following website http://eca.europa.eu or www.emea.europa.eu/htms/general/manage/ar.htm

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Official Journal of the European Union

(12)  Estimated value: 30 million euro.

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(13)  Estimated value: 4 million euro.

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(14)  Estimated value of 5,3 million euro.

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(15)  Estimated value of 4 million euro.

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(16)  OJ C 304, 15.12.2009, p. 27.

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