# C_2011366EN.01002701.xml

| 15.12.2011 | EN | Official Journal of the European Union | C 366/27 |
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15.12.2011

EN

Official Journal of the European Union

C 366/27

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REPORT

on the annual accounts of the European Medicines Agency for the financial year 2010, together with the Agency’s replies

2011/C 366/06

INTRODUCTION

INTRODUCTION

| 1. | The European Medicines Agency (hereinafter ‘the Agency’), which is 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’), which is 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 2010 budget amounted to 208,4 million euro, compared with 194,4 million euro the previous year. The number of staff employed by the Agency at the end of the year was 698, as compared with 664 in the previous year. |
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2.

The Agency’s 2010 budget amounted to 208,4 million euro, compared with 194,4 million euro the previous year. The number of staff employed by the Agency at the end of the year was 698, as compared with 664 in the previous year.

STATEMENT OF ASSURANCE

STATEMENT OF ASSURANCE

| 3. | Pursuant to the provisions of Article 287(1), second subparagraph, of the Treaty on the Functioning of the European Union, the Court has audited the annual accounts (3) of the Agency, which comprise the ‘financial statements’ (4) and the ‘reports on the implementation of the budget’ (5) for the financial year ended 31 December 2010, and the legality and regularity of the transactions underlying those accounts. |
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3.

Pursuant to the provisions of Article 287(1), second subparagraph, of the Treaty on the Functioning of the European Union, the Court has audited the annual accounts (3) of the Agency, which comprise the ‘financial statements’ (4) and the ‘reports on the implementation of the budget’ (5) for the financial year ended 31 December 2010, and the legality and regularity of the transactions underlying those accounts.

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| 4. | This Statement of Assurance is addressed to the European Parliament and the Council in accordance with Article 185(2) of Council Regulation (EC, Euratom) No 1605/2002 (6). |
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4.

This Statement of Assurance is addressed to the European Parliament and the Council in accordance with Article 185(2) of Council Regulation (EC, Euratom) No 1605/2002 (6).

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The Director’s responsibility

The Director’s responsibility

| 5. | As authorising officer, the Director implements the revenue and expenditure of the budget in accordance with the financial rules of the Agency, under his own responsibility and within the limits of the authorised appropriations (7). The Director is responsible for putting in place (8) the organisational structure and the internal management and control systems and procedures relevant for drawing up final accounts (9) that are free from material misstatement, whether due to fraud or error, and for ensuring that the transactions underlying those accounts are legal and regular. |
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5.

As authorising officer, the Director implements the revenue and expenditure of the budget in accordance with the financial rules of the Agency, under his own responsibility and within the limits of the authorised appropriations (7). The Director is responsible for putting in place (8) the organisational structure and the internal management and control systems and procedures relevant for drawing up final accounts (9) that are free from material misstatement, whether due to fraud or error, and for ensuring that the transactions underlying those accounts are legal and regular.

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The Court’s responsibility

The Court’s responsibility

| 6. | The Court’s responsibility is to provide, on the basis of its audit, a statement of assurance as to the reliability of the annual accounts of the Agency and the legality and regularity of the transactions underlying them. |
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6.

The Court’s responsibility is to provide, on the basis of its audit, a statement of assurance as to the reliability of the annual accounts of the Agency and the legality and regularity of the transactions underlying them.

| 7. | The Court conducted its audit in accordance with the IFAC and ISSAI (10) International Auditing Standards and Codes of Ethics. Those standards require the Court to comply with ethical requirements and to plan and perform the audit so as to obtain reasonable assurance as to whether the accounts are free of material misstatement and whether the underlying transactions are legal and regular. |
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7.

The Court conducted its audit in accordance with the IFAC and ISSAI (10) International Auditing Standards and Codes of Ethics. Those standards require the Court to comply with ethical requirements and to plan and perform the audit so as to obtain reasonable assurance as to whether the accounts are free of material misstatement and whether the underlying transactions are legal and regular.

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| 8. | The Court’s audit involves performing procedures to obtain audit evidence of the amounts and disclosures in the accounts and of the legality and regularity of the transactions underlying them. The procedures selected, including its assessment of the risks of material misstatement of the accounts or of illegal or irregular transactions, whether due to fraud or error, depend on its audit judgement. In making those risk assessments, internal controls relevant to the entity’s preparation and presentation of accounts are considered in order to design audit procedures that are appropriate in the circumstances. The Court’s audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the accounts. |
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8.

The Court’s audit involves performing procedures to obtain audit evidence of the amounts and disclosures in the accounts and of the legality and regularity of the transactions underlying them. The procedures selected, including its assessment of the risks of material misstatement of the accounts or of illegal or irregular transactions, whether due to fraud or error, depend on its audit judgement. In making those risk assessments, internal controls relevant to the entity’s preparation and presentation of accounts are considered in order to design audit procedures that are appropriate in the circumstances. The Court’s audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the accounts.

| 9. | The Court believes that the audit evidence obtained is sufficient and appropriate to provide a basis for the opinions set out below. |
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9.

The Court believes that the audit evidence obtained is sufficient and appropriate to provide a basis for the opinions set out below.

Opinion on the reliability of the accounts

Opinion on the reliability of the accounts

| 10. | In the Court’s opinion, the Agency’s Annual Accounts (11) fairly present, in all material respects, its financial position as of 31 December 2010 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation. |
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10.

In the Court’s opinion, the Agency’s Annual Accounts (11) fairly present, in all material respects, its financial position as of 31 December 2010 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation.

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Opinion on the legality and the regularity of the transactions underlying the accounts

Opinion on the legality and the regularity of the transactions underlying the accounts

| 11. | In the Court’s opinion, the transactions underlying the annual accounts of the Agency for the financial year ended 31 December 2010 are, in all material respects, legal and regular. |
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11.

In the Court’s opinion, the transactions underlying the annual accounts of the Agency for the financial year ended 31 December 2010 are, in all material respects, legal and regular.

| 12. | The comments which follow do not call the Court’s opinions into question. |
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12.

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

| 13. | The Agency experienced delays in implementing Title II ‘Administrative expenditure’ of its budget. Appropriations carried forward to 2011 on Title II totalled 17,6 million euro, 33,3 % of the corresponding appropriations. Just 36 % of the appropriations carried forward correspond to accrued expenditure of the year, meaning 64 % of the amounts carried over did not relate to the 2010 financial year. This situation was at odds with the budgetary principle of annuality. |
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13.

The Agency experienced delays in implementing Title II ‘Administrative expenditure’ of its budget. Appropriations carried forward to 2011 on Title II totalled 17,6 million euro, 33,3 % of the corresponding appropriations. Just 36 % of the appropriations carried forward correspond to accrued expenditure of the year, meaning 64 % of the amounts carried over did not relate to the 2010 financial year. This situation was at odds with the budgetary principle of annuality.

| 14. | Weaknesses were noted in the Agency’s system for validating creditor claims in respect of IT contractors. |
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14.

Weaknesses were noted in the Agency’s system for validating creditor claims in respect of IT contractors.

OTHER MATTERS

OTHER MATTERS

| 15. | The Agency did not distinguish sufficiently between employment-agency staff and contract staff recruitments. It should use employment-agency staff to cover short-term needs only and grant transparent access to contract staff positions. |
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15.

The Agency did not distinguish sufficiently between employment-agency staff and contract staff recruitments. It should use employment-agency staff to cover short-term needs only and grant transparent access to contract staff positions.

FOLLOW-UP ON PREVIOUS AUDIT FINDINGS

FOLLOW-UP ON PREVIOUS AUDIT FINDINGS

| 16. | In previous reports, the Court has noted the need for the Agency to introduce a system of remuneration for services provided by national Member State authorities based on the Member States’ real costs. Up to now, despite some efforts by the Agency, this has not been done. There is room for progress on this issue. |
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16.

In previous reports, the Court has noted the need for the Agency to introduce a system of remuneration for services provided by national Member State authorities based on the Member States’ real costs. Up to now, despite some efforts by the Agency, this has not been done. There is room for progress on this issue.

This Report was adopted by Chamber IV, headed by Mr Igors LUDBORŽS, Member of the Court of Auditors, in Luxembourg at its meeting of 6 September 2011.

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)  The Annex summarises the Agency's competences and activities. It is presented for information purposes.

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Annex

(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 a description of the main 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 (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 (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 16 June 2011 and received by the Court on 4 July 2011. The Final Annual Accounts can be found on the following website http://eca.europa.eu or www.ema.europa.eu

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ANNEX

European Medicines Agency (London)

Competences and activities

| Areas of Union competence deriving from the Treaty


  (Article 168 of the Treaty on the Functioning of the European Union) | 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. |
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| Competences of the Agency


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

(Article 168 of the Treaty on the Functioning of the European Union)

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.

Competences of the Agency

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

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.

Governance

1 —   The Committee for Medicinal Products for Human Use (CHMP), consisting of one member and one alternate from each Member State and 5 co-opted 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 co-opted 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.

Resources made available to the Agency in 2010 (2009)

Final Budget

208,4 (194,4) million euro; Union contribution: 13,6 % (1)
  (18,7 %)

Staff as at 31 December 2010

567 (530) provided for in the establishment plan, of which occupied: 546 (511)

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

Total staff: 698 (664), of which:

| — | Operational: 556 (520) |
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Operational: 556 (520)

| — | Administrative: 142 (144) |
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Administrative: 142 (144)

Products and services in 2010 (2009)

Medicinal Products for Human Use

| — | Applications for marketing authorisations: 91 (96) |
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Applications for marketing authorisations: 91 (96)

| — | Favourable opinions: 51 (117) |
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Favourable opinions: 51 (117)

| — | Average evaluation time: 167 days (157 days) |
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Average evaluation time: 167 days (157 days)

| — | Opinions after authorisation: 3 154(2 396) |
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Opinions after authorisation: 3 154(2 396)

| — | Pharmaco-vigilance: 302 362 reports (252 117 reports) |
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Pharmaco-vigilance: 302 362 reports (252 117 reports)

| — | Periodic safety update reports: 559 (425) |
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Periodic safety update reports: 559 (425)

| — | Scientific advice finalised: 322 (308) |
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Scientific advice finalised: 322 (308)

| — | Mutual Recognition Procedures and Decentralised Procedures: started 21 433(16 307); ended positively 11 100(15 335) |
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Mutual Recognition Procedures and Decentralised Procedures: started 21 433(16 307); ended positively 11 100(15 335)

| — | Applications for paediatric investigation plans: 326 (273) relating to 403 (364) indications |
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Applications for paediatric investigation plans: 326 (273) relating to 403 (364) indications

Medicinal Products for Veterinary Use

| — | Applications for marketing authorisations: 18 (15) |
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Applications for marketing authorisations: 18 (15)

| — | Applications in respect of variants: 162 (113) |
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Applications in respect of variants: 162 (113)

Inspections

Inspections: 300 (233)

Herbal Medicinal Products

Herbal monographs: 19 (17)

List of herbal substances, preparations and combinations thereof: 3 (0)

Orphan Medicinal Products

| — | Applications: 174 (164) |
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Applications: 174 (164)

| — | Favourable opinions: 123 (113) |
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Favourable opinions: 123 (113)

Small and Medium Enterprises (SME)

| — | Requests for SME status: 251 (217) |
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Requests for SME status: 251 (217)

| — | Applications for fee reduction or deferrals: 161 (80) |
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Applications for fee reduction or deferrals: 161 (80)

Source: Information supplied by the Agency.

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(1)  This is the percentage of the budgeted EU contribution (excluding special contribution for orphan medicines fee reductions and excluding the use of surplus resulting from the financial year n-2 by the budgetary authority) in relation to the final budget.

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THE AGENCY'S REPLIES

| 13. | The Agency has continuously improved its administrative carry-over since 2008, with automatic carry-overs in Title II 2008/09 at 45,3 %, 2009/10 at 36,2 % and 2010/11 at 33,3 %. The amounts in question for 2010 are for multiannual Telematics ICT projects. These Telematics projects are of an operational nature and as a consequence will be accounted for in Title III from 2011. Therefore from 2011/12 the Agency expects a reduction in carry-over in administrative expenditure to a maximum of around 30 % (corresponding to a reduction of 10,0 million euro). |
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13.

The Agency has continuously improved its administrative carry-over since 2008, with automatic carry-overs in Title II 2008/09 at 45,3 %, 2009/10 at 36,2 % and 2010/11 at 33,3 %. The amounts in question for 2010 are for multiannual Telematics ICT projects. These Telematics projects are of an operational nature and as a consequence will be accounted for in Title III from 2011. Therefore from 2011/12 the Agency expects a reduction in carry-over in administrative expenditure to a maximum of around 30 % (corresponding to a reduction of 10,0 million euro).

| 14. | The Agency has reinforced its system to validate creditor claims and aims to fully use the tools provided with SAP to mitigate any human errors in the process. |
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14.

The Agency has reinforced its system to validate creditor claims and aims to fully use the tools provided with SAP to mitigate any human errors in the process.

| 15. | The Agency notes the observations of the Court. Action has been taken to improve transparency by ensuring that all contract agent positions are more clearly publicised externally prior to being filled and that the EMA implementing rules on selection and recruitment of contract agents are correctly followed, including the use of recruitment agencies both to advertise vacancy notices and organise written tests on behalf of the Agency. |
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15.

The Agency notes the observations of the Court. Action has been taken to improve transparency by ensuring that all contract agent positions are more clearly publicised externally prior to being filled and that the EMA implementing rules on selection and recruitment of contract agents are correctly followed, including the use of recruitment agencies both to advertise vacancy notices and organise written tests on behalf of the Agency.

| 16. | Following the completion of the Costing Group Pilot in 2009 a proposal for a new payment system was presented to the Management Board at their meeting of 10 December 2009. The Management Board rejected the proposal. EMA will try again to instigate the discussions at forthcoming Management Board meetings and remind the Board of the need to move forward on this topic. |
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16.

Following the completion of the Costing Group Pilot in 2009 a proposal for a new payment system was presented to the Management Board at their meeting of 10 December 2009. The Management Board rejected the proposal. EMA will try again to instigate the discussions at forthcoming Management Board meetings and remind the Board of the need to move forward on this topic.

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