TABLE OF CONTENTS

1..... Procedural issues and consultation of interested parties 6

1.1. Overview........................................................................................................... 6

1.2. Preparatory work and consultation of interested parties................................... 6

1.2.1. Stakeholder consultation..................................................................... 6

1.2.2. Member States consultation................................................................. 7

1.2.3. Scientific input..................................................................................... 7

1.3. Scrutiny by the Commission Impact Assessment Board................................... 7

1.4. Consistency with other EU policies and horizontal objectives; Links with other legislation under review................................................................................................................ 8

2..... Problem definition......................................................................................... 9

2.1. Context.............................................................................................................. 9

2.1.1. Costs – Supply – Demand................................................................. 10

2.1.2. Legislative context............................................................................. 13

2.1.3. Public perception............................................................................... 15

2.1.4. Need for medicated feed production................................................ 15

2.2. Problem identification, its drivers and consequences...................................... 16

2.2.1. Presence of residues of veterinary medicines in feed........................ 16

2.2.1.1. Driver 1: Carry-over of veterinary medicines, notably antibiotics, into compound feed.................................................................. 17

2.2.1.2. Driver 2: "Zero tolerance".................................................. 18

2.2.1.3. Consequences.................................................................... 19

2.2.2. Imprecise dosage of veterinary medicines......................................... 19

2.2.2.1. Driver 1: Preventive costs for medicated feed production in some Member States................................................................................. 20

2.2.2.2. Driver 2: Poor homogeneity of medicated feed in some Member States 21

2.2.2.3. Consequences.................................................................... 21

2.2.3. Barriers to expand the production and intra EU trade of medicated feed 21

2.2.3.1. Driver 1: EU-Directive with vague provisions re manufacturing, differently interpreted by the Member States...................................... 22

2.2.3.2. Driver 2: Options for Member States' national regimes offered in the EU-Directive............................................................................ 23

2.2.3.3. Consequences.................................................................... 24

2.2.4. Impossible market access of medicated feed for pets....................... 24

2.2.4.1. Driver 1: Unclear scope of the EU-Directive.................... 24

2.2.4.2. Driver 2: National implementation of the Directive.......... 24

2.2.4.3. Consequences.................................................................... 25

2.3. Justification for EU action............................................................................... 25

2.3.1. The choice of legal instrument........................................................... 25

2.3.2. Subsidiarity - Conferral..................................................................... 25

2.3.3. Proportionality of EU action............................................................. 26

2.4. Small and Medium Enterprises - Micro-enterprises......................................... 26

2.5. Problem Tree.................................................................................................... 27

2.6. Forward looking - Baseline.............................................................................. 28

3..... Objectives........................................................................................................... 28

4..... Policy options.................................................................................................. 29

4.1. Option 1 - Maintain status quo........................................................................ 29

4.2. Option 2 - Amend Directive 90/167 combined with "soft law"...................... 29

4.3. Option 3 - New EU Regulation with detailed rules........................................ 30

4.4. Discarded Options........................................................................................... 32

4.4.1. Repeal of Directive 90/167................................................................ 32

4.4.2. No-stand-alone medicated feed law.................................................. 32

5..... Analysis of impacts...................................................................................... 33

5.1. Maintain Status quo......................................................................................... 33

5.1.1. Economic impacts.............................................................................. 33

5.1.1.1. Costs of MF production.................................................... 33

5.1.1.2. Market access..................................................................... 33

5.1.1.3. Compliance and administrative costs................................ 33

5.1.2. Impact on animal and public health................................................... 34

5.1.2.1. Animal health..................................................................... 34

5.1.2.2. Public health...................................................................... 35

5.1.2.3. Occupational health........................................................... 35

5.1.3. Other impacts..................................................................................... 35

5.1.3.1. Animal welfare.................................................................. 35

5.1.3.2. Environment...................................................................... 35

5.1.3.3. Subsidiarity........................................................................ 35

5.2. Amend Directive 90/167 combined with soft law.......................................... 36

5.2.1. Economic impacts.............................................................................. 36

5.2.1.1. Costs of MF production.................................................... 36

5.2.1.2. Market access and products availability............................ 36

5.2.1.3. Compliance and administrative costs................................ 36

5.2.2. Impacts on health............................................................................... 37

5.2.2.1. Animal health..................................................................... 37

5.2.2.2. Public health...................................................................... 37

5.2.3. Other impacts..................................................................................... 37

5.3. New EU Regulation with detailed rules.......................................................... 37

5.3.1. Economic impacts.............................................................................. 37

5.3.1.1. Costs of medicated feed production................................. 38

5.3.1.2. Market access – competitiveness....................................... 38

5.3.1.3. Compliance and administrative costs................................ 39

5.3.1.4. Prices of animal products................................................... 39

5.3.2. Impacts on health............................................................................... 39

5.3.2.1. Animal health..................................................................... 39

5.3.2.2. Public health...................................................................... 40

5.3.2.3. Occupational health........................................................... 41

5.3.3. Other impacts..................................................................................... 41

5.3.3.1. Animal welfare.................................................................. 41

5.3.3.2. Environment...................................................................... 41

5.3.3.3. International trade............................................................. 41

5.3.3.4. Subsidiarity........................................................................ 41

5.3.4. Plausibility check with the views expressed by stakeholders............ 42

6..... Comparing the options............................................................................... 42

6.1. Comparing options in terms of economic, health and other impacts............... 42

6.2. Comparing the options in the light of the objectives....................................... 43

6.3. Preferred option............................................................................................... 44

7..... Monitoring and Evaluation................................................................... 44

8..... Annexes................................................................................................................ 46

8.0. Glossary........................................................................................................... 46

8.1. List of relevant legislation and schema illustrating how medicated feed provisions are embedded into related EU-legislation............................................................................... 47

8.2. Economic data on the upstream and downstream activities............................ 49

8.3. Number of authorised medicated pre-mixes in the EU................................... 50

8.4. Number of approved operators for manufacturing and placing on the market of medicated feed......................................................................................................................... 51

8.5. Rules of good manufacturing practice of medicated feed.............................. 52

8.6. Use of veterinary antimicrobials – use of MF.................................................. 54

8.7. FVO findings re cross-contamination and homogeneity in different Member States 56

8.8. Situation about carry-over in the Member States and their position about harmonised tolerance levels................................................................................................................ 60

8.9. Medicated feed and antimicrobial resistance.................................................. 65

8.10. Notifications to the Rapid Alert System for Food and Feed of unauthorised veterinary medicines in feed 67

8.11. Results of the online stakeholder consultation................................................ 68

8.12. Summary of the online consultation complemented by the results of targeted consultations 77

8.13. Aggregated data base and assumptions for the modelling.............................. 86

1. Procedural issues and consultation of interested parties 1.1. Overview

The purpose of this impact assessment (IA) is to support the changes proposed to the medicated feed legislation in line with the principles set out in the Commission's Work programme 2013[1]. It is related to similar on-going work in the field of veterinary medical products. This review can be considered embedded in the general "Fitness Check Strategy" (assessment of the legal framework).

Giving veterinary medicinal products to sick animals via feed is one of several options for the animal holder. The current IA is concerned with this specific way of administering the veterinary medicinal products and will not elaborate on the other routes of administration, such as: by ointments or tinctures, by injections, oral powders or via drinking water.

Medicated feed is a mixture of feed materials and an authorised medicated premix. Whereas the premix is a veterinary medicine, fully subject to the medicines requirements, the final product is considered a feed.

Directive 90/167/EEC sets out the conditions under which medicated animal feeds may be manufactured, placed on the market and used within the EU. The Directive provides that only authorised medicated premixes may be used to manufacture medicated feed and that precise instructions must be given for the use of such feed. Medicated feed may be supplied to holders of animals only on presentation of a prescription from a veterinarian, subject to certain conditions. Food producing animals that have been fed with medicated feed must not be slaughtered before the end of the legally stipulated withdrawal period for each of the active substances contained in it.

The Health and Consumers Directorate-General has taken the initiative of revising Directive 90/167/EEC which is being done at the same time as the revision of the veterinary medicinal products legislation (Directive 2001/82/EC and Directive 2004/28/EC). The respective roadmap was submitted on 12 September 2012.

A glossary with technical terms and acronyms can be found in Annex 8.0 and full list of relevant legislation and a schema illustrating how medicated feed provisions are embedded into related EU-legislation can be found in Annex 8.1.

1.2. Preparatory work and consultation of interested parties

This IA builds on the results of an external study "Evaluation of the EU Legislative Framework in the Field of Medicated Feed"[2] carried out in 2009/2010 by the Food Chain Evaluation Consortium (FCEC).

1.2.1. Stakeholder consultation

Stakeholders were consulted in the context of the evaluation conducted in 2009/2010, following which internal consultations and discussion with the Member States took place. In addition, during the whole process consultations with the stakeholders were done in the margins of the Advisory Group on the Food Chain and Animal, Plant Health, the Animal Health Advisory Committee and the Advisory Committee on Fisheries and Aquaculture working group on aquaculture. Furthermore, targeted consultations of the International Federation for Animal Health Europe, the European Feed Manufacturers` Federation, the Federation of Veterinarians in Europe and the EU Farmers and Agri-Cooperatives were undertaken.

Following the stakeholder consultation in the margins of the FCEC evaluation, a new web-based stakeholder survey was organised from 30 March to 31 May 2011, using an Interactive Policy Making questionnaire to collect comments on the policy options.

Finally, focussed interviews with experts from the industry and competent authorities were undertaken mainly to collect data for the assessment of the options.

1.2.2. Member States consultation

In June 2009 a questionnaire was sent to the Member States plus Norway and Switzerland to gather information from the competent authorities on the status quo in the field of medicated feed.

In addition, the Commission has consulted and reported regularly to the working group of Chief Veterinary Officers, the Standing Committee on the Food Chain and Animal Health, Section Animal Nutrition and the Veterinary Pharmaceutical Committee.

1.2.3. Scientific input

Studies, data and scientific opinions from the European Food Safety Authority and the European Medicines Agency have been used as input into this assessment.

1.3. Scrutiny by the Commission Impact Assessment Board

Within the Commission, internal consultation was pursued through an Impact Assessment Steering Group (IASG) involving DG Agriculture, Competition, Employment, Environment, Mare, Research and Innovation, Trade and the Secretariat-General. The IASG was established in 2010 and met five times; in December 2012 a final electronic consultation was undertaken. The IA report was submitted to the IA Board on 12 December 2012. The IAB delivered an opinion on 18 January 2013. A revised IA report considering the board's recommendations was submitted on 12 July 2013 for which a positive opinion was issued on 11 September 2013.

The report was amended in line with the recommendations from the IAB, as follows:

(1) An effort was made to reduce the overlap between the different problem areas and drivers. Furthermore, the issues were explained more in detail and backed by the stakeholder contributions.

(2) Better explain the link to the regulatory framework on coccidiostats: The report better explains the differences between the current regimes for the administration of veterinary medicines via medicated feed and of coccidiostats (feed additives); this concerns approval of manufacturers, provisions about the incorporation into feed and their unintended residues in feed. Furthermore, the analogies in practice are outlined in order to better understand similar measures proposed in the policy options.

(3) The options are more concretely described in order to better indicate how the successive translation into a legal text would be made.

(4) Potential shortcomings of the preferred option, particularly against the criterion of proportionality, are addressed. Furthermore, additional robustness checks have been undertaken and a more detailed presentation of the impacts in the different Member States.

The results are presented now more disaggregated. Concerns of stakeholders were raised in a clearer way and the report indicates how it copes with them. A glossary had been added.

1.4. Consistency with other EU policies and horizontal objectives; Links with other legislation under review

The aim of the review of the medicated feed rules is to harmonise at an appropriate safety level the marketing of medicated feed in the EU and to reflect technical progress in this field. The review of the legislation on medicated feed must be seen in the context of the Commission’s efforts to strengthen the internal market, and foster industrial competitiveness, innovation and economic growth.

The project is in line with the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, "Commission Work Programme 2012, Delivering European renewal (Building a Union of sustainable growth and solidarity – a single market for growth, and smart regulation and effective implementation".

Medicated feed and antimicrobial resistance

The proposals listed in this impact assessment also aim to implement the actions set out in the Communication from the Commission to the European Parliament and the Council "Action Plan against the rising threats from Antimicrobial Resistance"[3]. Furthermore, the European Parliament called in its resolution on the public health threat of antimicrobial resistance of 27 October 2011[4] on appropriate actions in the field of animal nutrition. Also, the Resolution of the European Parliament of 11 December 2012 on the Microbial Challenge – Rising threats from Antimicrobial Resistance[5] requested a European response to the issue. Additionally, the Council called upon the Commission in its conclusions (Doc 10582/12) on the impact of antimicrobial resistance in the human health sector and in the veterinary sector - a “One Health” perspective - to expedite the review of the medicated feed directive.

Medicated feed and veterinary medicinal products

The revision of the directive on medicated feed is part of the same package as the revision of the veterinary medicinal products legislation. The respective IA tackles amongst others the issue of antimicrobial resistance and the better availability of veterinary medicines with respect to the marketing authorisation of medicines.

Medicated feed is a mixture of feed materials and additives with veterinary premixes authorised under the veterinary medicinal products legislation. Nonetheless, medicated feed is considered a very particular feed, with specific rules on the incorporation of the medicine into the feed.

Member States and the different stakeholders involved in this field have on several times indicated the importance of ensuring that the revision of the medicated feed legislation takes the specificities of the sector into account. This can only be done by an independent approach which builds on the links with the feed legislation and the veterinary medicinal products legislation.

2. Problem definition 2.1. Context

Farmed animals in the EU are fed with roughage, feed materials and compound feed (mixture of feed materials). If animals are sick and need a treatment, the veterinary medicine can be prescribed by a veterinarian and administered to animals via the following main routes: (1) topically i.e. externally as paste, cream or tincture (2) by injection or (3) orally. The vast majority of medicated feed for farmed animals contains antimicrobials or anti-parasites.

As regards the oral administration of medicine to animals, the animal holders can either (1) add oral medicines themselves to the animal feed or drinking water or (2) use medicated feed into which the medicine is incorporated by an authorised manufacturer. At best, the farmer has a special device[6] to incorporate the "ready to use" powder into his feed but often they just distribute the powders with a scoop. Also top dressing medication is rather common: the farmer sprinkles the dissolved medicine on top of the feed in the manger. The competent control authorities depend on the re-assurance from the farmers that they properly add the veterinary medicine to the feed or drinking water. On the other hand, medicated feed is usually manufactured by feed mills with sophisticated mixing technology and the authorities can verify the mixing quality upon approval of the establishment.

The following schema illustrates the oral administration of medicines to animals:

Medicated feed is generally used to treat animal disease in large groups of animals, particularly pigs and poultry. There is a clear correlation between the level of manufacturing standards and the quality of the treatment via medicated feed. High standards mean good homogenous distribution of the medicine in the feed, good compatibility of the medicine with the feed, and as a result good dosage ensuring an efficient treatment of the animal and low carry-over (sometimes called also "cross contamination") of the medicine into non target animal feed.

The evolution of the quantities of antimicrobials and the quantities of medicated feed used in the EU shows that the decision to use therapeutic antimicrobials is totally independent from the possibility to use medicated feed. Therefore, specific restrictions on medicated feed do not lead to a reduction of the use of antimicrobials in livestock farming because oral alternatives (ready to use powders mixed in feed, top dressing, via drinking water) or the administration via injection still remain available.

Measures concerning the prescription and availability of all forms of antimicrobial veterinary medicines (including premixes for medicated feed) are addressed in the parallel IA on the review of the veterinary medicines directive.

2.1.1. Costs – Supply – Demand

There are 13.7 mio. animal holdings in the EU.[7] The value of livestock farming output in the EU is €157 bn[8]. The value of the EU's aquaculture which includes production of crustaceans, molluscs, and finfish[9] is estimated to be €3.3 bn. Pet animals represent the second largest type of animals kept in the EU. There are around 64 million cats, 60 mio. dogs, 40 mio. pet birds, 25 mio. small mammals and many millions of ornamental fish. All these farmed animals, aquaculture species and pets may need medication from time to time.

Animal feed (feed materials, additives and compound feed) are the main input into livestock production and the most important cost factor for the famers with an average of 47% of the total production costs. The production of compound feed for food producing animals was 151 mio. t in 2011 resulting in a turnover of €50 bn. More than 110,000 persons are employed in approximately 4,000 production sites. These companies are generally SMEs with a turn over between €10 mio. to €100 mio and 20 to 100 employees. The structure of the pet food sector is similar with 650 plants a turnover of € 13.5 bn (2010)[10]. The production structure is optimised by the industry leading to interregional supply chains of a very broad range of different feed types (dry/wet, complete feed/speciality feed, different target animals, packed in can/bag/poach/treat). Despite its large size, the pet food market in the EU is by and large irrelevant with regard to the use of medicated feed[11].

The EU veterinary medicines market was valued at € 4.3 bn. in 2011. The sales figures by value according to IFAH-Europe include parasiticides (27 %), vaccines (26%), antimicrobials (19%), topical products (7%) and other products (20%).[12] Based on information from the European Group for Generic Veterinary Products, there are no evident differences in the businesses with premixes depending on whether the VMP is a branded or a generic product; in other words: it does not matter for the manufacturing and use of medicated feed whether the veterinary medicine is a generic or a protected brand.

More data on the upstream and downstream activities can be found in Annex 8.2.

In 18 Member States, oral routes of medication with antimicrobials represented 91% (2010) of the total sales of antimicrobials[13]. The respective share according to the FCEC case study[14] in 2006 for France, United Kingdom and Finland was 88%, 90% and 55%. Premixes for medicated feed manufacture represented in 18 Member States 54% (2010) of orally administered antimicrobials[15]. According to the FCEC case study[16] for France, United Kingdom and seven big manufacturers of veterinary medicines that share was 59%, 70% and 64%, respectively.

Premixes for medicated feed: The number of nationally authorised premixes varies significantly between the Member States from just a few in some Member States to more than 300 in France (see Annex 8.3). Only two premixes have been approved centrally and therefore only medicated feed based on these two medicines can be marketed throughout the EU. For all the other medicated feeds, an authorisation of the respective premix must be obtained in the Member State of destination. The authorisation of veterinary medicines, including premixes for MF, is not covered in this impact assessment but in the parallel one on veterinary medicines which is addressing the fragmented market for VMPs in the EU.

The significance of medicated feed varies drastically amongst EU Member States[17]. In 2008, production figures were highest in Spain (2 - 3 mio t), Italy (1.3 mio t) and France (0.8 - 1 mio. t). The United Kingdom (0,5 mio t), Belgium (0,3 mio t) and the Czech Republic (0,1 mio t) are also quite important producers whereas Germany (12,000 t) and Denmark (12,000 t) are of minor relevance. The share of medicated feed production from the total compound feed output ranges from 9% in some Member States to only 0.1% in Germany[18] (for more data see Annex 8.6).

Table 1: Production of medicated feed (in 000’ tonnes) in some Member States and the evolution from 2004-2008

|| 2004 || 2005 || 2006 || 2007 || 2008

Belgium || n.a. || n.a. || n.a. || n.a. || 300

Czech Republic || 92 || 111 || 154 || 149 || 99

Denmark (a) || n.a. || 0.01 || 3 || 9 || 12

France || 800 – 1,000 || 800 – 1,000 || 800 – 1,000 || 800 – 1,000 || 800 – 1,000

Germany || 225 || 150 || 80 || 20 || 12

Italy || n.a. || n.a. || 1,085 || 1,260 || 1,330

Spain || 2,600 || 2,500 || 2,200 || 2,000 || 2,000 – 3,000

United Kingdom || n.a. || n.a. || n.a. || n.a. || 500

Source: Civic Consulting

Notes: (a) Only medicated feed containing zinc oxides (see country case study Denmark).

In Member States such as France, Poland, Portugal and Spain, where the national system does not result in significant extra-costs for the production, the businesses can market the medicated feed at competitive prices and thus the trend for production and marketing is stable to slightly positive. In Member States where the national system imply high extra costs, the industry either cross-subsidises the medicated feed in order to retain their clients for their normal feed sales or they abstain from offering medicated feed because they know that the farmers would not pay the extra costs and instead would use the other routes of medication.

Table 2: Additional costs of manufacturing medicated feed compared with production costs of compound feed in Member States with different national schemes (in €/tonne)

Cost factor (in €/tonne) || Denmark || France || Germany || United Kingdom

Additional consumption of fixed capital (additional equipment and buildings) || 2.32 || 0.02 || 50.5 (a) || 0.36

Additional labour costs (b) || 6.33 || 0.59 || 12.5 || 3.17

Additional cleaning costs (costs of flushing/rinsing) || 1.75 || 0.08 || n.a.(c) || n.a.(d)

Cost of tests (homogeneity test, test of drug carry-over, analytical control of concentration of active substance in medicated feed) || 1.21 || 0.12 || 4.80 || 0.06

Administrative costs (annual administrative fee) || 0.28 || 0.06 || 2.50 || 0.02

Total additional cost of manufacturing medicated feed (excluding cost of the medicine) || 11.89 || 0.87 || 70.33 || 3.62

Source: FCEC Consulting (see Annex 11)

Notes:

(a) In the case of Germany, the additional consumption of fixed capital includes 50 Euro of depreciation cost per tonne of medicated feed for the end-of-line mixer and 0.5 Euro of depreciation cost per tonne of medicated feed for storing of medicated pre-mixes.

(b) Additional labour costs for medicated feed production include the labour costs for a veterinarian/pharmacist, where applicable, and the share of labour costs of staff members performing tasks related to the production of medicated feed (e.g. production manager, quality control officer and feed mill workers).

(c) Because of the use of an end-of-line mixer, there is no need to clean the production line following medicated feed production.

(d) In the feed mill selected for the case study, most flushed materials are used to produce medicated feeds.

The manufacture of medicated feed is usually done by the compound feed industry as a special service for their clients that opt, on their veterinarian's advice and prescription, for the medicated feed route. Thus the vast majority of medicated feed production is integrated into the compound feed mills and comes from the approximately 1600 authorised operators (N.B. 4000 compound feed sites in total). The share of turnover of the medicated feed activity in the compound feed industry ranges on average from 3% to 5%. In some specialised feed mills, this value can be up to 30%[19] but these plants usually belong to companies with several production sites, one specialised on medicated feed and the others exclusively ordinary compound feed which makes an overall share of medicated feed for the company in the above mentioned range. Besides these, there are also independent mobile mixers which come with their specifically equipped lorries to the farms. Finally, a rather limited share of the medicated feed[20] is produced in the approximately 5700 farms with specifically authorised premises (N.B. a total 13,7 mio. livestock farmers can potentially administer veterinary medicines to their animals)[21].

The diverging situation in the Member States with respect to numbers of the different kinds of manufacturers of medicated feed and the authorised distributers involved in supplying the market is shown in Annex 8.4. The activities of authorised distributers significantly contribute to a smooth functioning of the medicated feed market. However this activity is not allowed in 11 Member States. Where the national rules for medicated feed manufacturing imply high extra costs, the industry either cross-subsidises the medicated feed in order to retain their clients for their normal feed sales or they abstain from offering medicated feed because they know that the farmers do not pay the high extra costs and use instead the other routes of medication. Thus, for the compound feed industry concerned, the manufacturing of medicated feed cannot generally be considered a business branch to evidently contribute per se to the company's profit. In Member States where the national scheme does not result in significant extra-costs for the production, the businesses can sell the medicated feed at least at cost prices and the trend for medicated feed is stable to slightly positive. As, in these Member States, competition exists between the feed mills but also between feed mills and mobile mixers, medicated feed is at a competitive price compared to the other routes of medication.

An estimation of the total EU production of medicated feed would indicate a range between 4% and 5% which represents a quantity of 6 – 7.5 mio t of medicated feed, creating a total turnover of medicated feed in the order of € 1.6 – 2 bn. This turnover includes the input of the veterinary medicines and the feed. The isolated employment effect, solely for the additional activity "incorporation of the premix into the feed" is estimated to be in the order of less than 1000 manpower units for the total EU[22].

The EU trade in compound feed is not very evident. This is because feed imports and deliveries from the production regions in the EU are usually in the form of bulk raw materials for processing, mixing and compounding close to where the animals are kept. In addition, Member States' regimes are different both for veterinary medicinal products (generally national authorisations) and for medicated feed (no harmonisation at all). This complicates also deliveries in regions close to borders. Thus, the trade in medicated feed within the EU is currently even more negligible than for compound feed.

- The significance of medicated feed for farmed animals varies extremely between the Member States

- It is a niche market with no specialised medicated feed industry. Medicated feed production can be rather considered a service of the compound feed industry to their clients.

- Medicated feed for pets is negligible.

- The national regimes determine the costs for medicated feed production and consequently the supply. The demand is an endogen variable of the specific supply situation in a Member State.

- Trade between the Member States - even in regions near to borders - and also exports and imports of medicated feed are negligible.

2.1.2. Legislative context

Directive 90/167[23] introduced some important and still valid concepts into Community legislation. In particular, it provided that medicated feed had to be manufactured in approved premises in accordance with Community legislation using staff with adequate qualifications. It provides that medicated feed can be made with feed complying with feed law (a.o. Regulation (EC) No 767/2009), issued on the prescription of a veterinarian, with records being retained in the feed mill. However, the Directive gives no indication on what standards to apply in approving plants or the acceptable techniques to produce medicated feed, and whether standards should be technology based or results based.

In addition, while it provides that medicated feed shall be homogenous, it does not define this critically important term and provides no means to do this at EU level. It is silent on the concept of carry-over of medicated feed between batches and provides no mechanism to regulate this. It is vague on whether feed may be prepared in advance of prescription in the feed mill, allowing Member States to interpret it differently. It does not address either the labelling of medicated feed which has both internal market and safety implications. It allows that each individual consignment moving between Member States be accompanied by a (paper) certificate from the Competent Authority of origin. It makes no provision for electronic communication either for prescriptions, feed movement or product information.

The enforcement of the provisions established by the Directive in the EU is regularly checked in audits of the FVO (Food and Veterinary Office, a DG SANCO Directorate). As the Directive is quite general and giving much flexibility to the Member States, those EU-controls for compliance cannot be very concrete in practice. There was only one infringement procedure launched some years ago because one Member State contradicted the EU-Directive in a national legal implementing act.

There are specific additional issues concerning medicated feed for pet animals. This was an unknown concept in 1990 and there is no mention of pet animals in the legislation. Furthermore a provision that the feed mills must keep a record of all individual animal keepers using their feed is valid for local farm deliveries but is a major obstacle for a pet food factory providing specialised medicated feed for pets throughout the EU.

For the manufacture of medicated feed, an authorised premix is mandatory. Veterinary medicines can be approved in the EU centrally or at national level[24]; the latter is still predominant for the medicated feed premixes. The authorisation of veterinary medicines, including premixes, is addressed in the parallel impact assessment on veterinary medicines.

Coccidiostats and histomonostats are considered to be veterinary medicines but their authorisation is regulated under the scope of the Feed Additive Regulation. Thus, authorisation and use of these substances are fully harmonised. Furthermore, in 2009 maximum levels of their unavoidable carry-over in non-target feed were established. Feed additives cannot be directly fed to the animals, but have to be added to feed materials or water. In order to ensure the correct dosage of a coccidiostat to the animal, the incorporation of the additive into the feed materials can be only done by approved feed business operators which apply the HACCP principle. They deliver the formulated complete or complementary feed to the livestock farmer.

- Medicated feed is a specific form of feed but with strong legal links to veterinary medicines.

- The enforcement of the Directive by the EU in practice is rather limited due to its general and vague character.

- The revision of the veterinary medicines regime aims to improve the smooth functioning of the internal market in this area.

- Legislation on feed marketing, feed additives and maximum residues limits of undesirable substances in feed has been fully harmonised.

2.1.3. Public perception

As a niche in an area between feeding and treating animals, public interest or concern about medicated feed is marginal. However, the often vehement discussions at national and European level about antimicrobial resistance also call for EU-action in the area of medicated feed (see 1.4). Numerous announcements for national action plans in this context show the citizens concern regarding the emergence of multi-resistant bugs.

Furthermore, there are a huge number of pet animals (estimated to number several millions, see Annex 8.13) which suffer from chronic diseases but their owners struggle to administer their medication in the form of pills. On the one hand, a small number of pet owners are aware of medication via ordinary pet food (medicated feed) as a good way of treatment but they do not have regular access to medicated pet food and on the other hand the vast majority of owners are not yet aware of this convenient treatment possibility.

2.1.4. Need for medicated feed production

Evidently, the crucial criterion for the choice of the medication route is the cost situation[25]: Whether medicated feed is a more costly or a more cost efficient route of administering oral VMPs compared to water medication or via ready to use powders depends on

· the manufacturing standards pursuant to the specific Member States` requirements,

· the pricing strategy applied by manufacturers of medicated feed (see 2.1.1) and

· the pricing strategy of the VMP industry for the active substance.

Additional factors are subjective perceptions of cost advantages or effectiveness of the different routes of medication, specific taxation rules, monetary incentives of veterinarians and traditions. Finally, investments in equipment to administer the VMPs via a certain route (e.g. dosing devices or specific storage containers for medicated feed) are sunk cost and thus provide an incentive to continue the practice.

Medicated feed (apart from pets) is not an industry but a small process or service provided within an industry. Individual decisions on pricing of the MF industry are not transparent (largely elaborated in Annex 11 of the FCEC report). In some cases, profit margins for MF can be up to 11% (compared to 6% of non-medicated feed) and in other cases the MF may be cross subsidised by sales of non-medicated feed.

Cost delta for the 2 main oral routes (see 4 case studies in Annex 11 of FCEC report):

- In DK and UK choice depended on the drug prescribed (for some drugs MF-medication was cheaper, for others water medication),

- In FR, MF medication has cost advantage (8-24%),

- In DE water medication is cheaper (10-14%).

Based on the consultations of the concerned stakeholders (feed industry, veterinarians and farmers), the decision of the veterinarian, in coordination with the farmer, depends in the first place on the availability at the price set under the national framework for the various routes of medication (FCEC report p. 42). In the second place, other factors such as perceived convenience, efficacy and safety are also important as is whether investment has already taken place on the farm to use one or another method. On tax, an issue on value added tax (VAT) has an effect in DE but not in other MS. There, the high VAT-rate is charged for the MF in its totality which cannot be reclaimed by some farmers, usually smaller ones that have some tax privileges; but MF is mostly used in bigger holdings with regular taxation. If the farmers buy the feed part and the veterinary drug separately, they only are charged for the VMP with the high VAT-rate. This can only be considered a marginal further cost disadvantage for MF, because only the farmers with that tax privilege cannot reclaim the higher VAT paid.

Several MSs (HU, RO, SI) did note that administration by water/powder was gaining market share over medicated feed which would be a continuation of the current trend. SI related this specifically to the greater regulatory controls on MF than on the alternative routes.

It can be concluded that the farmer's and pet owner's choice for a specific route of medication depends from the supply side i.e. the decision for medicated feed or alternative routes is done based on the specific options offered to him.

2.2. Problem identification, its drivers and consequences 2.2.1. Presence of residues of veterinary medicines in feed

The development of antimicrobial resistance (AMR) is a serious public health risk (more details can be found in Annex 8.9). For the treatment of infections in animals oral medication with antimicrobials is most common. For oral administration of antimicrobials there are several routes, one of them is medicated feed. The FCEC survey and the ESVAC data show that the use of medicated feed has no influence on the overall quantity of antibiotics used in livestock farming (for more details see Annex 8.6). Similarly, the excessive use of antimicrobials can be only satisfactorily addressed in the context of the holistic AMR strategy. The most important element with respect to AMR is the frequency of use and the type of the specific antimicrobial; these issues are addressed in the parallel IA on veterinary medicines.

Concerning medicated feed (i.e. apart from the frequency/quantities of AM-use) AMR can arise from sub-therapeutic (incorrect dosage) or residual (carry-over from a medicated feed) levels of antimicrobials in feed. The issue of incorrect dosage is covered under 2.2.2.

Depending on the active substance, above a certain level (minimum inhibitory concentration, MIC) of the antimicrobial, combined with a longer duration of the exposure of the commensal bacteria in the gut, selective amplification of the resistant subpopulation of the pathogen can be expected.

Figure extracted From (Hesji et al., 2007).

On the other hand, residue levels below the MIC have no evident impact on AMR.

EU ban on antibiotic growth promoters

Administering antibiotics and other antimicrobial agents to animals in doses significantly below the level used for treatment of diseases can have positive impacts on the micro-biota in the intestine of the animals and thus improve zootechnical parameters. Such applications are known as antibiotic growth promoters. However, such sub-therapeutic use of antimicrobials can increase the risk of bacteria becoming resistant and subsequently causing problems in human health. Considering the emerging risk of antimicrobial resistance, the EU decided in 2003 to ban the use of antibiotics in feed for growth promoting purposes from 2006 onwards. EU-controls found residues of antimicrobials in un-medicated feed in the order of those growth promoter levels.

2.2.1.1. Driver 1: Carry-over of veterinary medicines, notably antibiotics, into compound feed

The Food and Veterinary Office found that many Member States had in place measures to avoid or minimise cross-contamination (for details see 8.7). These measures comprised a variety of actions at production level such as using dedicated lines, setting up manufacturing sequences for production or flushing and/or in-depth cleaning of equipment. However, in 18 Member States, feed operators did not ascertain the effectiveness of these measures related to cross-contamination and, therefore, it could not be ensured that they were sufficient. In some countries, cross-contamination tests were not performed at all and the level of cross-contamination was not quantified by operators. In a couple of Member States, the level of cross-contamination measured by these tests was underestimated as samples were taken after the mixer. In a couple of countries, cross-contamination tests were run on a very limited number of samples. In a small number of Member States, the limit of detection of the analytical method used for these tests did not allow to quantify cross-contamination levels lower than 10%. Furthermore, findings of veterinary medicines in feed are reported in the Rapid Alert System for Food and Feed (RASFF)[26] and a list of such notifications can be found in Annex 8.10.

Also the online stakeholder consultation showed an absence of any common ground with respect to carry-over: 42% respondents indicated that tolerance levels exist in their Member State, whereas 30% claimed that a zero tolerance is to be applied and 28% did not know. The large group of undefined responses illustrates that the situation in many Member States is unclear. A further analysis of the 42% respondents showed that in many Member States, even from a formalistic legal point of view, tolerances for VMP residues are officially accepted up to 5% of the therapeutic level which might be, for many antibiotics, above the MIC level. The Belgian compound feed industry claims that due to efforts in recent years the cross contamination had been significantly decreased but even if they consider levels of 10% "very extreme" they are not unrealistic.

16 Member States have no clear rules on the carry-over ("no value", see Annex 8.8). Both competent authorities and MF manufactures have to undergo a burdensome case by case evaluation if residues of veterinary medicine are found in feed. Three Member States have already established tolerance levels which are, on the one hand, arbitrary from a legal point of view and, on the other hand, are more derived from the application of the ALARA (as low as reasonable achievable) principle than from an assessment for public health risks.

The manufacturing of medicated feed cannot totally avoid a carry-over of veterinary medicines into batches of feed that should be free of such substances ("zero tolerance"). This carry-over, also called cross contamination, appears even if medicated feed is produced in dedicated lines of the compound feed mill with end of the line mixers (e.g. during transport of feed) or if it is manufactured on the farms where the medicated feed is used. However, the carry-over can be significantly reduced.[27]

2.2.1.2. Driver 2: "Zero tolerance"

From a legal point of view, residues of veterinary medicinal products in ordinary compound feed are not allowed (zero tolerance) i.e. that positive findings of VMPs make the feed not marketable. Eight Member States apply, according to the central authorities, officially a zero tolerance for the carry-over of veterinary medicines. The situation in the Member States is detailed in Annex 8.8. Zero tolerance in the food chain is difficult to implement, thus in practice for VMPs, stakeholders

- try to find "pragmatic solutions" together with the local competent authorities or

- by-pass the rules using other ways of administration.

An example for the unclear, contradictory situation in a Member State where medicated feed is of high importance can be seen from the response of the central Italian authority:

"… Officially, the national control plan sets a zero tolerance regarding residues of veterinary medicines in feed. In fact the tolerance level is the level of analytical detection related to the accredited laboratory method. Any positive finding has to be followed by corrective actions imposed by local competent authorities (case by case: seizure, destruction, penalties, RASFF notification, procedures of the national control plan of residues in food etc) … From the official control point of view, maximum levels of unavoidable carry-over of VMPs in non-target feed is a necessity. Feed operators are … committed to adopt any measures in order to minimise the carry-over, according to Reg. 183/2005 and Directive 90/167/EEC. However, even in the best situations, carry-over cannot be completely eliminated to zero, as well known. Moreover, Community levels are necessary in order to avoid different practices among Member States, and different standards related to safety of feed."

This position of the competent authorities is very unsatisfactory for the business operators as they cannot be sure that, even if they follow the national rules, they are not prosecuted by the authorities in the case of positive findings.

The by-passing of a strict zero tolerance implementation can be increasingly observed in the EU as for the administration of veterinary medicines to animals, several alternatives to MF exist, notably direct use on the farm of oral powders, top dressing or administration via drinking water. However, they entail weaknesses also concerning residual presence of veterinary medicines on the farm mainly due to cross contamination of the equipment used to administer the veterinary medicines. Additional weaknesses are tackled in 2.2.2.

Case studies on AM-use in Germany

- Medicated Feed has no significance in Germany for the administration of antimicrobials to animals

- But, in one Land 92,5% of broilers (generally aged under 40 days) have been treated at least with one antimicrobial, mostly at therapeutically incorrect doses (NRW 2011)

- 76% of the broilers, 97% of the turkeys, 68% of the pigs, 100% of the calves for fattening and 92% of the cattle for fattening have been treated at least with one antibiotic (NI 2011)

- In 62% of the poultry houses, at least one antimicrobial was found in the drinking water though it was not used in the time of sampling (NRW 2012)

2.2.1.3. Consequences

· AMR risk in those Member States with generous tolerance levels.

· Burdensome case by case evaluation in Member States where no carry-over level exists and possibility that follow up of positive findings does not fully guarantee public health protection.

· Legal uncertainty for stakeholders in Member States with a "pragmatic" implementation of the zero tolerance.

· Cross contaminations on farms in Member States with a strict application of the zero tolerance due to increased use of less controllable alternatives to medicated feed.

· Unavailability of medicated feed in Member States with strict application of the zero tolerance.

2.2.2. Imprecise dosage of veterinary medicines

The precise dosage of oral VMPs is crucial for an effective group treatment i.e. to ensure that each individual animal gets the correct therapeutic dose. Incorrect dosage may cause toxicity in the animal (too high dosage) or increase the risk that animals are not cured (too low dosage). The animal health problem due to under-dosage is particularly severe for the weak animals because they need the medication in the first place and these individuals already suffer from competing with stronger individuals in their access to feed.

Field study in Germany (DPT 90:12 (2009)

- 96 % of farms used oral powders for group or herd treatment.

- 76% of the oral powders were given via feed, 11% via drinking water, 12% of the farms apply both routes

- 1/3 of farmers dosed the oral powder per hand to the feed

- Only in 18.5% of the samples was the correct therapeutic dose given (in 70.4% there was under-dosage and in 7.4%, an overdose)

- There were severe carry-over problems: 40% of samples had 1-4 unintended active substances of which 20% were at or above the respective therapeutic level.

Conclusion: objective of improving safety in on farm use of medicines, by increasing the regulatory burden for medicated feed alone, has not been achieved.

Report of the French food safety agency (Anses) 2012 (saisine no 2011-SA-0048): - Significant weaknesses of mixing oral powders into feed by the farmer even if done in compliance with the summary of the product characteristics (SPCs) of the VMP. Oral powders are only first choice under very specific conditions. - In general, medicated feed with advantages in terms of safe and efficient medication.

Precise dosage is at risk on the one hand if the medicated feed manufacturing does not guarantee a homogeneous incorporation of the medicine into the feed or if the medicated feed intake of animals is lower than expected and on the other hand if less precise routes of dosage (e.g. top dressing of oral powders) are dominating. If the microbes in the animal are exposed to sub-therapeutic dosage of antimicrobials[28], a significant number of pathogens survive the treatment and their presence will stimulate the selection of resistant strains of microbes.

The legislation for coccidiostats and other sensitive feed additives does not allow the farmer to add them on their own to the feed. Instead, it requires that this is done by approved feed manufacturers to ensure the homogenous incorporation of these additives into the feed and thus a precise dosage ("premixture obligation"). This is EU wide enforced. However, the oral administration of veterinary medicines ("ready to use powders") can be done by each farmer without any official licensing. And even if the medication is via medicated feed, depending on the rigidity of the respective national regime, the homogeneity of the medicated feed is in various Member States hardly enforced.

2.2.2.1. Driver 1: Preventive costs for medicated feed production in some Member States

Some Member States impose burdensome requirements for the manufacturing of medicated feed in order to avoid misuse of medicated feed leading to costly medicated feed. For example, producers of medicated feed in Germany must comply with pharmacology production standards. This means installing totally separated production lines for compound feed and medicated feed. This involves not only additional investment in a separate medicated feed line but also extra costs for the equipment (materials, technology), the workers and control staff. These extra costs do not apply in other Member States because medicated feed production can be done in the ordinary compound feed production lines. Also in Austria, the national rules impose high burden for the feed industry whereas on-farm manufacturing of medicated feed is implemented at a pragmatic level. Consequently, the manufacturers with the best mixing technology are not operating in this business and all the premixes used are mixed on farm[29] into the feed, apart from the oral powders directly applied via the feed or water. Other Member States where, due to national rules, a trend away from expensive, controlled medicated feed manufacturing to alternative routes of administration can be observed are Luxemburg, Malta, Romania, Bulgaria, Hungary, Greece and Cyprus. In about 1/3 of the Member States the costs for professionally medicated feed can be assumed to be preventive.

As the quantity of veterinary medicines used are independent from the availability of the different routes of administration, such high and thus preventive costs of medicated feed manufacturing result in more use of the other, less precise routes. The oral powders are usually not incorporated into the feed by specific, calibrated devices. The top dressing of the medicines risks that the strong, dominant, animals have an excessive uptake while the weak animals do not have access to feed and are thus deficient. An important percentage of the oral powders is dosed per hand by the farmers (see above) with evident weaknesses concerning precise dosage in group treatments. The authorities in these Member States try to tackle this issue by supporting the investments in dosage devices but there is no hard law to oblige the farmers.

The imprecision of the drinking water route is the quantity of water that is spilled and also the variation of the water quantity drunk by the animals. Furthermore, practical experience from drinking water medication has reported the creation of solid complexes in the pipes, jamming the drinking taps, which can affect the dose precision.

These problems of the oral powder medication cannot be tackled in the margins of the medicated feed legislation but are under the scope of the veterinary medicine law. The leverage on more precise dosage of the livestock in the medicated feed area is to induce for more animals the treatment via medicated feed instead of less precise "ready to use" powders.

2.2.2.2. Driver 2: Poor homogeneity of medicated feed in some Member States

The non-homogeneous mixing of medicines into a quantity of feed means that a part of the feed is under-dosed whereas another part is overdosed. The problem of under-dosage is further aggravated for weak diseased animals.

The homogenous incorporation of the veterinary medicine into the feed is a general requirement for the operators in the EU-Directive. In some Member States this provision is quite diligently implemented by means of explicit measures to achieve and control this. However, in other Member States the requirement is not enforced to this extent.

Medicated feed manufacturers are usually aware of the requirement about homogeneity. However, in nine Member States out of 25 inspected by the FVO, operators did not verify that they achieved homogeneous mixtures. This lack of verification concerned on-farm and mobile mixers, but also a number of feed mills. In some Member States, the verification of the feed homogeneity was only based on visual examinations or on the analysis of only one sample (more details can be found in Annex 8.7). If the competent authority has no willingness or resources to insist on a good homogeneity test, the FVO has no means to conclude non-compliance with the EU-Directive due to missing indicators. Evidence from practical application of the valid homogeneity tests shows that homogeneity cannot be assumed per se by using a certain technology but that each establishment has to be optimised to achieve it.

The evidence produced in France, Germany and Ireland indicates that homogeneity cannot be automatically assumed if the operator merely relies on the technology he installed. Instead, it is crucial to measure recovery rates of the medicine in the finished medicated feed (homogeneity) and residues of medicines in the on target animal feed. Based on these criteria the optimisation of the dosage and mixing process or the concrete design of the flushing regime taking into account the different active substances and feed materials has to be done for each manufacturing site.

2.2.2.3. Consequences

· Ineffective treatment of sick animals as they do not get the therapeutic level of the veterinary medicine (failure of therapy for under-dosed) and residues of the medicines in the animal products (over-dosed animals) both in Member States where medicated feed is displaced by less precise oral powders and in those where homogeneity of medicated feed is not sufficiently ensured.

· Development of antimicrobial resistance as many animals are treated at sub-therapeutic levels (=MSW, see chapter 2.2.1.1), 70% according to the DE-study (see above).

2.2.3. Barriers to expand the production and intra EU trade of medicated feed

Today, each Member State has created its own national system for MF which means in reality an extremely complicated but also costly situation, particularly for the concerned industries:

· 67% of the experts interviewed in the margins of the FCEC survey indicated at least "fairly significant negative consequences" of the different national frameworks for the competitiveness of the manufacturers of medicated feed. The group "Business organisation / enterprise / farmer" called in the online consultation with 86% for "action at EU level instead of national level". Even though a reminder to the subsidiarity and proportionality principles was made in the question the figure in the group of public authorities was 82%.

· The extreme differences in practice between the Member States were addressed by 88% of the respondents to the online consultation who pleaded for more harmonised rules at EU level (results of the online consultation can be found in Annex 8.11).

2.2.3.1. Driver 1: EU-Directive with vague provisions re manufacturing, differently interpreted by the Member States

If the medicated feed industry intends to expand their manufacturing to other Member States they must study and cope with the specific national rules in the Member States. The vague provisions in the EU-Directive about homogeneity, qualification of staff, labelling and record keeping have led to diverging interpretations by the national authorities. In addition, the majority of Member States have mandatory rules for good manufacturing practice in place, in others such rules are only voluntary and a third group does not have them at all (for more details see Annex 8.5). Finally, the character and content of the rules of good manufacturing practice applied varies between Member States. As the manufacturers of medicated feed are pre-dominantly SMEs that cannot afford expensive regulatory affairs departments to research in national manufacturing requirements in potential Member States and the margins in medicated feed are so small (see 2.1.1), the expansion outside the "home" Member State is very limited.

With respect to manufacturing practice, the current Directive only mentions national measures but no European measures. Nonetheless, the European Feed Manufacturers’ Guide (EFMC)[30], an industry driven document based on the Feed Hygiene Regulation, whose application by the operators is voluntary, contains since 2009 a chapter on medicated feed manufacturing. However, this soft law measure evidently has not improved the manufacturing of medicated feed. Based on their audits in the Member States, the FVO identifies the following as key weaknesses of the existing voluntary EFMC guide:

"Once control measures for the reduction of cross-contamination are in place (e.g. flushing, production sequencing, cleaning, etc.), the determination of the level of carry-over as a tool to determine whether these control measures are effective or not is not foreseen; operators flush and take it for granted that this is reducing their carry-over to acceptable limits without any verification."

The effectiveness of the control measures should be assessable against the concrete legal limits of the substance concerned (e.g. Directive 2002/32/EC for coccidiostats in non-target feed). This is another main weakness identified by the FVO, that even when operators see a reduction in carry-over, they do not know whether it means that they are in compliance or not.

The determination of the level of carry-over should be done according to a sampling plan where the number of samples and their timing should be determined with the purpose of determining the content of the substance concerned (i.e. the actual level of cross-contamination) in feed placed on the market."

Soft law measures still lack the leverage to change a situation that has intentionally evolved. Neither the Member State Authorities nor the operators for which the EFMC is voluntary can be forced to commit themselves. It can be only an offer to interested parties. As long as strong commitment of specific manufacturers to apply such soft law is missing, manufacturing quality of medicated feed cannot be assured.

2.2.3.2. Driver 2: Options for Member States' national regimes offered in the EU-Directive

The Directive foresees several measures, which the Member States can chose to apply on their territory, that influence production and deliveries of medicated feed:

· Anticipated (advance/pre-) production of medicated feed The feed mill can produce medicated feed based on past sales patterns in advance of receiving the veterinary prescription from the distributor or farmer. The feed mill can optimise the batch sizes according to the expected orders thus reducing costs and the carry-over of the VMPs in non-target animal feed (larger batch production means less problems of carry-over). Another benefit is the timely delivery: if the veterinarian prescribes a veterinary medicine it is usually quite urgent that the animals be treated. If the medicated feed can be dispatched directly upon arrival of the prescription the treatment is more efficient. On the other hand, some Member State fear, that once the medicated feed is produced without prescription, there is a strong incentive to use it by any means. They therefore forbid pre-production.

· Mobile mixers Lorries with a specific mixing technology can deliver the feed separate from the premix to the farm and do the manufacturing of the medicated feed on site. The competent authorities have -both when approving the operator and when controlling later in the field- the means to ensure that the respective technology and its application in practice meet the requirements for medicated feed. However, as the precision of the inclusion of the premix into the feed is usually not as good as in specialised feed mills, just a few Member States authorise mobile mixers even though one could cope with this e.g. by setting specific production parameters.

· On-farm mixing The farmer himself is approved to produce the medicated feed he needs for his animals on the condition that he meets the respective requirements. It is the competence of the national authorities to enforce this. Some Member States do not allow on-farm manufacturing because they think that the, nationally set, high standards for medicated feed (these are mainly the MS with the "preventive standards") cannot be achieved on the farms. Indeed the quality of medicated feed from specialised feed mills is superior and requires certain technology and production skills. However, it cannot be assumed that a priori these conditions cannot be fulfilled by farmers and specific measures and parameters can be foreseen to cope with this. Furthermore, the alternatives applied in these Member States (water, powder) are usually much less safe and efficient.

· Distributors Under certain conditions Member States can authorise distributors, apart from the manufacturer, to issue medicated feed to the animal holder. The existence of intermediaries between manufacturers and users increases the flexibility of the system and allows, particularly for medicated feed with small volumes, to be produced remote from the final user. Some Member States forbid the activity of distributors which they consider represent a risk of misuse of medicated feed and because controls would be even more complicated : apart from the manufacturers on their territory they must also control the distributors. However, the risk inherent to internet sales of veterinary medicines for direct use seems much more evident than the risk with the distribution of well controlled medicated feed manufactured in the EU.

The denial of these options decreases the economic viability of the medicated feed route and increases the costs for a treatment via medicated feed[31]. Examples for Member States which allow these options are FR, IT, ES, PL and UK and it can be observed that the MF-route is quite important there. The actual combinations of the options chosen by the Member States in their national regimes lead to the fragmentation of the EU market for medicated feed.

2.2.3.3. Consequences

· Barriers to intra EU trade of medicated feed (walling-off), restricted competition and obstacles to the dissemination of innovations.

· High regulatory burden to the industry if they do not limit their business to the local market.

· Unsatisfactory MF manufacturing (poor guides for stakeholders) in MS with lax rules.

· Excessive costs in MS that "gold plated" the MF regime (one after the other MS stop MF production, thereby diverting medication to less controllable routes).

2.2.4. Impossible market access of medicated feed for pets

Generally medicated feed is used for the treatment of larger animal groups in livestock farming. However, for certain veterinary medicinal products the treatment of pets via a medicated feed could be an excellent route allowing owners to provide for their pets medication in the form of prepared feed. Besides, as pets get older and older, many of them with chronic non-transmissible diseases require long term medication, which is not based on antimicrobials. For such pets, the professional incorporation of the medicine into the ordinary food for the animal is an interesting proposition and would also be a major business opportunity. Medicated feed for pets to treat chronic conditions, particularly in older animals or in difficult to medicate animals (especially cats) is potentially a very large and untapped business opportunity. Experiences of pet owners and veterinarians specialised on pets show that it is very difficult to administer a pill or other separately formulated medicine to the pet animal.

2.2.4.1. Driver 1: Unclear scope of the EU-Directive

Today, medicated pet food is only available in three Member States. A combination of factors have resulted in many Member States feeling unable to authorise these products and in the industry believing that there are too many regulatory obstacles to placing products on the market[32]. Several Member States are unsure if the medicated feed legislation can even apply to pets as it is based on old Article 43 of the Treaty (Common Agricultural Policy), thus considered to be applicable only for farmed animals and have therefore been reluctant to approve medicated premixes for pets.

2.2.4.2. Driver 2: National implementation of the Directive

The requirement for a prescription to be available in advance of production (as distinct to delivery) goes against central production and distribution. Several Member States do not allow anticipated manufacturing of medicated feed. Or others do not agree on distributors acting as intermediaries between manufacturer and user, insisting instead on distribution direct from the feed mill to the holder of the animal, which pet food distribution cannot comply with.

2.2.4.3. Consequences

· Barriers for innovative companies that want to expand their business in medicated pet food.

· Owners of pets with chronic diseases are prevented from treating them in this comfortable and efficient way.

2.3. Justification for EU action 2.3.1. The choice of legal instrument

The current legislation on medicated feed is a Directive that has been established before the creation of the internal market and that had never been adapted in substance. The national transposition of this legal instrument has given freedom to Member States regarding interpretation and implementation of the legal provisions, but this flexibility has contributed to the problems as laid down in 2.2. With respect to the development of the national systems, the trend over the decades shows that those problems have rather deteriorated instead of improved even though many Member States tried to tackle the problems with national action plans. Thus, the legal instrument is an elementary issue for the different policy options and their evaluation.

2.3.2. Subsidiarity - Conferral

The Member States have established their national regimes for medicated feed under the current Directive which has led to diverging situations in practice and to the problems explained in 2.2. Besides, the Communication from the Commission Europe 2010 "A strategy for smart, sustainable and inclusive growth" identifies the incomplete functioning of the single market as a missing link and a bottle neck for growth in the Union[33]. To achieve a strong single market in the area of medicated feed, there is a need to streamline across the Union the regulatory system and remove inefficiencies and barriers to intra EU trade.

The protection of public health is a competence conferred upon the EU by the Treaty. With respect to the AMR almost all Member States came up with national action plans tackling, at least partially, medicated feed. These national efforts either contain an explicit call for EU-action or they implicitly hint that EU-action would be sensible. Thus, as extensively explained in the impact assessment on veterinary medicines, a holistic EU-Action plan against the rising threats from AMR had been developed. One of the concrete actions is the revision of the medicated feed Directive. Also, the Resolution of the European Parliament on "the Microbial Challenge – Rising threats from Antimicrobial Resistance" demanded a European response to the issue. Additionally, in 2012 the Council called upon the Commission in its conclusions (Doc 10582/12) to expedite the review of the medicated feed directive.

The Directive 90/167 was based on Art 43 of the Treaty establishing the European Economic Community (now article 43 of the TFEU), implementing the Common Agricultural Policy. However, there is evidence that the existing provisions do not deliver the ambition of a functioning internal market. For this, there is a need across the EU to simplify and streamline the regulatory system for the production of medicated feed and remove barriers for new products.[34]

The general and vague requirements in the old Directive are difficult to enforce: The Commission Services have difficulties to police the, unambiguously important, requirement "homogenous incorporation of the veterinary medicine in the medicated feed" in Member States that actually do nothing. Action at EU level would produce clear benefits compared with action at the level of Member States. The EU is in a better position than the Member States to draw up a harmonised and proportionate system to regulate the production and use of medicated feed. A single set of EU rules would reduce the distortions in production conditions for the feed industry and in competitiveness for the livestock farmers. Measures for medicated feed are essentially no more than those already very successfully applied for feed additives, a category of products which is fully harmonised at EU level and which is incorporated in every batch of compound feed and pet food produced. It is not logical that medicines can be included in feed with fewer safeguards that apply to feed additives at present. In the FCEC study, the online consultation and targeted consultations the stakeholders overwhelmingly pleaded for concrete harmonised measures at EU level.

2.3.3. Proportionality of EU action

With a view to ensure proportionality of measures the new legislation should reflect the technological progress in feed manufacturing and feeding techniques and flank the measures taken in the area of veterinary medicinal products. The choice for the new scheme is representing the least onerous way to achieve the objectives. Further is will ensure flexibility of implementation to reflect the regional specificities and variations in livestock farming practices in the EU.

2.4. Small and Medium Enterprises - Micro-enterprises

The cross-cutting principles of promoting health, safety and the interests of European consumers are directly embedded in the Treaty. Therefore, as a matter of principle, all EU legislation regarding food safety and public health should apply to all business operators as their impact on the health and safety of citizens is highly significant. The Commission is therefore cautious when considering any exemptions or lighter regimes for SMEs and micro-enterprises for these policy areas, since such exemptions should not undermine the high level of protection which has already been achieved.

The medicated feed business is driven by SMEs and micro-enterprises even if the medicated feed is only one activity of a bigger feed compounder; multinational players are, so far, exceptional. SMEs are reluctant to accept a high regulatory burden and large investments because they cannot realise economies of scale comparable to very large enterprises. Thus, the higher the burden for the manufacturing and the compliance costs, the bigger the disadvantage for the SMEs and micro-enterprises.

It is not proposed to exempt micro-enterprises from the scope of legislation on the production of medicated feed though it may be possible to exempt them from some of the specific requirements, depending on the nature of their business. For example, a mobile mixer could occupy a critical point in the feed supply chain, mixing feed for several hundred farms and would thus have a disproportionate negative impact if this mixing is not done in a correct way. Medicated feed produced by these methods should meet the same standards as a feed mill.

On the other hand, a farmer mixing feed on his own farm for his own animals could be the same enterprise size as a mobile mixer but would have a more limited impact if he failed to meet the same standards. It may be possible in this case to apply more final product characteristics (homogeneity etc.) than detailed process requirements to provide the necessary flexibility for his business, while preserving the essential safety elements.

2.5. Problem Tree

2.6. Forward looking - Baseline

It can be expected that the trends observed above will carry on:

· An unclear situation for the manufacturers in Member States where medicated feed is produced in big volumes continues. The concerned industry is very uncomfortable with a situation where the authorities can always police them e.g. because of carry-over residues or poor homogeneity. The criticism of misuse of medicated feed with antibiotics from these Member States will continue. AMR would stay high in the political agenda.

· The inconsistency between the specific tolerance levels for coccidiostats in feed laid down in Directive 2002/32 and the unclear situation with respect to carry-over of veterinary medicines into feed would persist.

· The current downward trend in use of medicated feed for food producing animals in Member States that stick to very rigid requirements would continue because either the medicated feed route is not offered at competitive prices or the industry does not offer it at all. Measures to optimise the production in terms of safety and economics will continue to be very restricted. On the other hand, the less controllable and less precise routes of medication will become even more important. Even more animals will be treated via the alternative, less controllable routes. This means another inconsistency between the administration of veterinary medicines and the sensitive feed additives for which legislation requires their inclusion into the feed by qualified operator. Consequently, medicated feed survives mainly in those Member States with poorer manufacturing standards.

· As regards pets, little change is expected. The industry cannot develop without changes that would allow them to benefit from the scale of the single market. The pet industry has none of the transport constraints that can apply to compound farm feed as individual volumes are by far smaller (medicated feed for one cat versus for 100 pigs).

· The activity of medicated feed manufacturers will remain limited to the local markets within their "home" Member State. Notwithstanding the huge potential for high quality medicated feed, there is only poor interest in the industry to expand in medicated feed as long as the burden is so high.

In conclusion, AMR is not adequately addressed and less and less animals are treated with high quality medicated feed, even if this would be the first best route of medication.

3. Objectives

The general objectives of this initiative are

(1) the smooth functioning of a competitive and innovative internal market for medicated feed whilst

(2) ensuring a high level of protection of animal and public health.

For the functioning of the internal market, a level playing field for production, marketing and use of medicated feed across the EU should be established. The harmonised manufacturing standard for the EU should be set at a safe level.

The specific objectives derived from are linked to the problems and drivers identified

· Overcome the zero-tolerance for unavoidable carry-over of veterinary medicines

· Make medicated feed available to farmers and pet owners at a competitive price

· Curb AMR-risk from residual and sub-therapeutic administration of antimicrobials

· Improve animal health by precise dosage of oral veterinary medicines

· Remove barriers for innovative, "novel" medicated feed.

4. Policy options 4.1. Option 1 - Maintain status quo

No EU action is undertaken in the area of medicated feed. Thus, this option can be considered the Baseline Scenario: The existing Directive will keep its general character and still be subject to varying national interpretation and implementation. Different sets of rules for manufacturing and use of medicated feed will apply from one Member State to another. The Member States have a maximum of competence in setting the rules while the responsibility for proper enforcement is also in their hands.

The Commission`s function as guardian of the EU-law would be quite limited because of the vague character of the Directive. The FVO just controls that the general principles established in the Directive are applied by the Member States. As long as enforcement remains only based on the existing medicated feed Directive, efforts to tackle the problems can hardly materialise. In absence of criteria for crucial issues such as homogeneity or residues of veterinary medicines, it is impossible to leverage the controls. Bad and good performers can hardly be detected.

The EFMC and, if applicable, the national guides remain in place simultaneously. The medicated feed Directive requires that operators "comply with hygiene rules and principle of the Member State in question". These rules can span from a pure transfer of the general wording of the EU-Directive to concrete mandatory laws with any kind of guides built therein. Member States will continue to have on their territories different regimes for residues of veterinary medicines in feed, mirroring the full scenario explained in 2.2.1.

4.2. Option 2 - Amend Directive 90/167 combined with "soft law"

The scope of the Directive would be clarified and also extended to cover the production, marketing and use of medicated feed for pets with respect to the objective "remove barriers for innovative MF applications". In addition, the amendment of the Directive would streamline it with the currently revised veterinary medicines legislation to flank the objectives to improve the internal market and the public health. In concrete, the provisions for the intra-EU trade of medicated feed and veterinary medicines would be fully aligned and the legislative measures to fight AMR such as monitoring would be transferred to medicated feed. This could result in a certain incompatibility if the new legislation on veterinary medicines is a Regulation and also because the import procedures for medicated feed are under the scope the horizontal Regulation on official controls on food and feed whereas the import of veterinary medicines is separately regulated.

The intervention logic at EU level in terms of manufacturing standards would charge the voluntary EFMC guide. A stringent reference to the feed hygiene regulation would clarify that the EFMC is also valid for the manufacturing of medicated feed (currently the legal base is only the vague provision in Directive 90/167). In Member States without any guides, the industry could take advantage of the EFMC and in those with voluntary national guides a new benchmark would be established that could challenge the further existence of these.

With respect to the weaknesses of the EFMC as outlined in 2.2.3.1, the Commission would encourage the industry to improve the EFMC in particular by including best practises with respect to minimising the carry-over or the process of incorporation of veterinary medicines. The setting of more concrete parameters about manufacturing would give the FVO a better base to monitor the general objectives of the EU legislation. However, the consequent improvement of the medicated feed manufacturing would be only feasible in those operations that apply the improved voluntary EU guide. It remains very difficult for control authorities and the FVO to prove that lax manufacturers are not in compliance with the legislation.

The option does not foresee any changes to the technical provisions of the current legislation in terms of manufacturing standards (see 2.2.3). The general character of the provisions and the possibilities for the MS to foresee specific rules on their territory remain.

4.3. Option 3 - New EU Regulation with detailed rules

88% of the stakeholders pleaded for harmonised rules set at EU level. The reasons for this request can be found in all four problems identified: Residues of veterinary medicines in feed, imprecise dosage of veterinary medicines, impossible market access of medicated feed for pets and barriers to intra EU trade of medicated feed. Also the Council and the European Parliament suggested concrete action at EU-level (see 1.4 and 2.3.2) though these focus mainly on EU-measures to curb AMR (see problems 2.2.1 and 2.2.2).

In this option the clarifications concerning the scope and the streamlining with the veterinary medicines in option 2 are undertaken but in the legally directly binding form of a Regulation. Whereas medicated feed for farmed animals is usually produced in bigger quantities for the specific farm and for a short term treatment (often of a microbial disease), medicated pet food would be rather produced more centrally in batches for the treatment of mainly chronically diseased animals kept by many different users. Therefore a specific distribution system will have to evolve in practice and also specific rules for the veterinary prescription have to be foreseen. The validity of the prescription and the quantity prescribed in case of the treatment of a chronic disease in a cat must of course be different from the validity and prescribed quantity of a medicated feed with an antimicrobial to treat an infection in a group of 50 pigs.

Distributors will be allowed in the whole EU to intermediate between the manufacturers and the users of medicated feed which is critically important for medicated pet food. The rather centralised production structure for ordinary pet food could integrate the activity of controlled incorporation of veterinary medicines into dry and wet pet food in existing establishments or certain producers of the relevant veterinary medicines could expand into the manufacture of medicated pet food. The role of the veterinarian as regards the prescription of medical treatments for pets would be unchanged as the pet owners would still have to obtain a prescription from them.

In line with the position of the stakeholders (see following box), precise EU standards for medicated feed in terms of mixing technology and homogeneity will be established in the Regulation, covering all possible manufacturing schemes. Based on best practices in the Member States, homogeneity criteria could be set in an implementing act. Consistent EU-tolerances for the maximum deviation of the labelled concentration of the veterinary medicine in the medicated feed from the actually analysed concentration in a control sample could be established.

Manufacturing schemes – quality and safety (results of online consultation):

· For 79 % of the respondents (4% no idea) anticipated production of MF does not raise concerns in terms of efficient and safe use of the VMPs.

· 67 % of the respondents (20% no idea) believe that mobile mixers can meet the requirements for MF with respect to homogeneity and compatibility of the different components.

· 66 % of the respondents (12% no idea) believe that on-farm manufacture of MF can meet the requirements for homogeneity and compatibility of the different components.

· 41 % of the recorded responses believe that left overs of MF on the farm, e.g. due to a change of treatment might cause problems.

Anticipated medicated feed production, mobile and on farm mixing will be authorised in the EU, while simultaneously tightening the standards for these schemes. Considering that in terms of homogeneity specialised feed mills have advantages over mobile mixers or on-farm manufacturing, the latter are only allowed to use premixes with a higher inclusion rate. Nonetheless, in the margins of the approval by the competent authority, all manufacturers shall be subject to regular verification of product quality, including the verification of homogeneity. Appropriate qualification of the staff, functionality of the equipment particularly the mixing technology and measures to segregate the medicated feed from other feed are other conditions for the approval of the manufacturers.

The issuance of precise veterinary prescriptions and their strict adherence by both the manufacturers and users of medicated feed has to be severely policed by the competent authorities of the Member States to prevent any misuse with medicated feed produced in advance of the prescription is available. Also, these provisions include measures for disposal of medicated feed on farm that is not used e.g. due to a therapy change.[35]

EU wide tolerance levels will be set for the unavoidable carry-over of veterinary medicines in non-medicated feed, based on an assessment of the risk for the animals and the humans with regard to the different types of active substances. For the antimicrobials the risk assessment will take into account the MIC-levels (see 2.2.1). The resulting tolerance level would be a percentage of the therapeutic dose of the veterinary medicine. A similar approach has already been successfully applied for residue levels of coccidiostats[36] (veterinary medicines under the scope of the Feed Additive Regulation). The EU-Authority for the risk assessment could take advantage of the evaluations already undertaken by some Member States. In analogy to the approach for the coccidiostats, the implementing risk management decision would choose the lower level out of the result of the risk assessment and the carry-over levels that following the ALARA-principle[37].

According to the targeted consultations of stakeholders and the online consultation, the establishment of such tolerance levels is strongly recommended to overcome the problems mentioned in 2.2.1. Also 19 out of 22 competent authorities responding to a targeted survey in spring 2013 were in favour of such tolerance levels (see Annex 8.8).

The weaknesses of the voluntary EU-guide that will be sorted out. Product criteria are established that guarantee a safe and efficient manufacturing of medicated feed. The operators have full flexibility how to meet these criteria with their manufacturing process.

The competent authorities in the Member States could concentrate on the control of the concrete product criteria and would be released the task of trying interpret the general Directive. They would be held responsible to ensure that medicated feed is only delivered upon prescription, homogeneity criteria are met by all manufacturers and misuse of medicated feed is avoided. The FVO could in practice check that the Member States efficiently enforce the criteria set in the EU-Regulation, which they are used to in many other areas of food and feed law.

4.4. Discarded Options 4.4.1. Repeal of Directive 90/167

The removal of specific EU-legislation on the manufacture and use of medicated feed would imply that

· for the rules on the manufacturing, marketing and use of medicated feed, the general feed and veterinary medicine legislation is applicable but with a totally unclear status of medicated feed and

· the Member States are totally independent to establish specific requirements for their territory.

Each Member State would be forced to tackle with national rules the evident risks and to render those national regimes consistent with the harmonised legislation on feed and veterinary medicines in order to avoid lacunae and loop holes. Member States would no longer be obliged to approve the establishments. However, feed law requires the approval of compound feed mills once they incorporate feed additives. Proper incorporation of veterinary medicines into feed is at least as sensitive as additives. The production of medicated feed would be conducted on the basis of requirements established in the compound feed legislation. No specific labelling rules for medicated feed would exist. The barriers to intra EU trade of medicated feed and to innovation/dissemination of emerging medicated feed applications would increase. Additionally, the high regulatory burden to the industry (SMEs) that do not want to limit their business to the local market becomes more evident. The administrative burden for the authorities in the Member States increases because they have to cope with their mandate to create and implement national rules specifically for medicated feed in the absence of any EU framework.

Concerning subsidiarity, national authorities would have the full responsibility to regulate particular medicated feed issues within their competence. This is, both with respect to the legislative means and to the substance, a big challenge because in the interlinked areas of feed and veterinary medicines such national structures do not exist.

In conclusion, all the problems identified in 2.2 would deteriorate if the Directive is deleted without substitution.

4.4.2. No-stand-alone medicated feed law

The splitting of the substance to be regulated between already existing legal acts (Feed Hygiene and Feed Marketing Regulations, Directives on veterinary medicines and undesirable substances in feed) would allow the Directive to be repealed without formally creating a new law.

However this option was discarded because of the very particular status of medicated feed: though it is a special form of feed, the link to the veterinary medicines is very strong. This refers to the veterinary prescription but also the pharmacovigilance and other information duties. There is serious concern amongst the authorities in the Member States that strict rules concerning medicated feed would lose their clear status if they are spread over different legal acts in the area of feed and VMPs. In fact, several Member States strongly objected in the consultation to simply adding this legislation to feed law. This is also mirrored in the Resolution of the European Parliament of 11 December 2012 on the Microbial Challenge – Rising threats from Antimicrobial Resistance.

Therefore, a stand-alone legal act for medicated feed is appropriate in order to take into account the sensitivities about this route of medication.

5. Analysis of impacts

As a result of the problem identification, the major focus of the analysis is on economic and public health impacts.

5.1. Maintain Status quo

This option is the baseline scenario (see 2.6). Neither tangible provisions for the manufacturing nor product criteria for medicated feed would be set at EU-level. The technical provisions for the manufacture of medicated feed remain either vague or subject to specific national rules.

5.1.1. Economic impacts

5.1.1.1. Costs of MF production

National implementation of the general EU-rules still leads to a tremendously different set of economic parameters for the manufacturers of medicated feed. The cost delta between Member States with lesser and more demanding requirements for the manufacturers of medicated feed would be fixed (extra costs from 1 €/t to 70 €/t, see 2.1.1) though the internal market of feed and animal products is fully harmonised. This is heavily criticised by the compound feed industry in the Member States with more demanding standards (they took their consequences) but also by the famers that are deprived of medicated feed as an option to cure their animals.

5.1.1.2. Market access

Mobile mixers and bigger livestock farmers would be still hindered by national rules from producing medicated feed. The trend that fewer animals are treated via medicated feed will continue because either medicated feed is too expensive or not offered at all. The poor availability of medicated feed in many areas is criticised by livestock farmers, explicitly including aquaculture.

Deliveries of medicated feed from one Member State to another would force the producer to comply with potentially significantly different requirements of the Member State of destination. More accentuation on the existing, voluntary EU guidelines for good manufacturing practice could to a limited extent improve the harmonisation of the conditions for MF production in the EU.

For innovative, new applications of medicated feed the marketing environment remains very scattered and exclusive. Industry that wants to expand in these areas complains about this.

5.1.1.3. Compliance and administrative costs

The pre-eminent task of the competent authorities is to control the manufacturing and use of medicated feed. On top of this, each of the national authorities would face the administrative burden to set up or keep updated their existing concrete rules for MF manufacture on their territory, triggered by the increased awareness of the weaknesses of medicated feed manufacturing in many countries as explained in 2.2. Many Member States (those with no national mandatory guides or with just general references) do not engage in this field because they lack the resources for this task.

Despite the tendency that fewer MF manufacturers have to be authorised and controlled under option 1, the implicit increased use of alternative rout