TABLE OF CONTENTS

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

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

1.2. Stakeholder consultation................................................................................... 6

1.3. Inter-service Steering Group.............................................................................. 7

1.4. Scrutiny by the Commission's Impact Assessment Board................................. 7

2..... Problem definition......................................................................................... 8

2.1. Background....................................................................................................... 8

2.2. Problem identification....................................................................................... 9

2.3. Underlying drivers........................................................................................... 10

2.3.1. A multi-species and stagnant market................................................. 10

2.3.2. Costs to place a product on a pluri-national market.......................... 12

2.3.3. Complex requirements for keeping medicines on the market............ 14

2.3.4. Lack of clarity in the legislation........................................................ 15

2.4. Contribution to the fight against the development of resistance to antimicrobials 17

2.5. Principles of Conferral, Subsidiarity and Effectiveness (added value) tests.. 19

3..... Objectives........................................................................................................... 20

3.1. General objective............................................................................................. 20

3.2. Specific and relevant operational objectives.................................................... 20

3.3. Consistency with other EU policies and horizontal objectives........................ 21

4..... Policy options.................................................................................................. 21

4.1. Baseline scenario – "no EU action"................................................................. 21

4.2. Policy options regarding lack of availability of veterinary medicines............. 23

4.2.1. Policy options to expand the market beyond the top four animal species 23

4.2.2. Policy options to simplify procedures for obtaining a marketing authorisation in multiple national markets................................................................................. 24

4.2.3. Policy options to review data requirements in marketing authorisation procedures 25

4.2.4. Policy options to simplify post authorisation requirements............... 26

4.2.5. Policy options for breakthrough medicines....................................... 27

4.2.6. Policy options to clarify rules on internet retail, on the authorisation of new treatments, on inspections and on authorisation of medicines for emerging diseases 27

4.3. Additional policy options to strengthen the veterinary medicines legislation regarding the authorisation and use of veterinary antimicrobials in veterinary medicine...... 28

4.4. Options discarded at an early stage................................................................. 29

5..... Analysis of impacts...................................................................................... 29

5.1. Costs and benefits of options to expand the market beyond the top four animal species 30

5.1.1. Option 1 - No new EU action............................................................ 30

5.1.2. Option 2 - Improve the Cascade........................................................ 30

5.1.3. Option 3 – Expand the database to cover all veterinary medicines... 30

5.1.4. Option 4 – Reduced data requirements for veterinary medicines for limited markets 31

5.1.5. Option 5 – Reduced data requirements for medicines for bees........ 31

5.2. Costs and benefits of options to simplify authorisation procedures................ 31

5.2.1. Option 6 - No new EU action............................................................ 31

5.2.2. Option 7 - Automatic recognition of a national marketing authorisation 31

5.2.3. Option 8 - Single marketing authorisation procedure for all products 32

5.2.4. Option 9 – Wider scope for the centralised procedure...................... 32

5.2.5. Option 10 - Simpler packaging and labelling..................................... 33

5.2.6. Option 11 – Allow already nationally approved medicines to freely circulate across the Union................................................................................................. 34

5.3. Costs and benefits of options to review data requirements for marketing authorisation procedures......................................................................................................................... 35

5.3.1. Option 12 - No new EU action.......................................................... 35

5.3.2. Option 13 – Generic applications may refer to environmental data.. 35

5.3.3. Option 14 – Harmonisation of clinical trial procedures across the Union 36

5.4. Costs and benefits of options to simplify post authorisation procedures........ 36

5.4.1. Option 15 - No new EU action.......................................................... 36

5.4.2. Option 16 – Risk-based pharmacovigilance...................................... 36

5.4.3. Option 17 – Review of procedures to change a marketing authorisation (variations) 36

5.4.4. Option 18 – Delete the obligation to market a product within 3 years of approval (Sunset clause)................................................................................................ 37

5.4.5. Option 19 – Delete requirements for renewals.................................. 37

5.4.6. Option 20 Exempt homeopathic medicines from pharmacovigilance requirements 37

5.5. Costs and benefits of options to review incentives for breakthrough medicines 37

5.5.1. Option 21 - No new EU action.......................................................... 37

5.5.2. Option 22 – Extended data protection for new veterinary medicines 38

5.6. Costs and benefits of options to improve clarity on internet retailing of veterinary medicines, authorisation of new treatments, inspections, authorisation of medicines for emerging diseases......................................................................................................................... 38

5.6.1. Option 23 - No new EU action.......................................................... 38

5.6.2. Option 24 – Authorisation to sell veterinary medicines through the internet in all Member States................................................................................................. 39

5.6.1. Option 25 – Establish a framework to authorise new treatments...... 40

5.6.2. Option 26 – Establish a basis to harmonise the controls on the veterinary medicines distribution chain............................................................................... 40

5.7. Additional policy options to strengthen the veterinary medicines legislation regarding the authorisation and use of veterinary antimicrobials in veterinary medicine...... 41

5.7.1. Option 27- No new EU action........................................................... 41

5.7.2. Option 28 – Introduction of legislative measures to allow restrictions to be placed on the authorisation and use of veterinary antimicrobials............................ 41

5.7.3. Option 29 - Measures regarding advertising of veterinary medicines, including antimicrobials..................................................................................... 42

5.7.4. Option 30 - Measures regarding retailing of veterinary antimicrobials 42

5.7.5. Option 31 - Introduction of a legal basis for the compulsory collection of data on the use of antimicrobials................................................................................ 43

6..... Comparison of the policy options....................................................... 43

7..... Monitoring and evaluation................................................................... 48

8..... annexes................................................................................................................ 51

Annexes || Page

Annex 1 Acronyms || 52

Annex 2 Glossary || 53

Annex 3 Information sources || 58

Annex 4 Background information on the veterinary sector || 65

Annex 5 Overview of the institutional landscape and of the regulatory framework for veterinary medicines || 70

Annex 6 Further information related to the problems identified with the veterinary medicines legislation and on antimicrobial resistance || 79

Annex 7 Availability of veterinary medicines for bees || 106

Annex 8 SMEs and micro-enterprises || 109

Annex 9 Consultation results and stakeholders ‘ views || 111

Annex 10 Discarded options || 154

Annex 11 Comparison tables of policy options || 157

Annex 12 Table providing an overview of problems, specific objectives, operational objectives and preferred policy options regarding the problem of lack availability of veterinary medicines || 173

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

The legal environment for the authorisation, production, marketing, distribution and use of veterinary medicines is set out in Directive 2001/82/EC of the European Parliament and of the Council (Articles 95 of the Treaty establishing the European Community - TEC) and Regulation (EC) No 726/2004 of the European Parliament and of the Council (Articles 95 and 152 (4) (b) of the TEC). Following the entry into force of the Lisbon Treaty, amending the TEC, Articles 168 (4) (c) and Article 114 of the Treaty on the Functioning of the European Union (TFUE) give the legal basis for the legislation in the area of veterinary medicines.

Over the years, the regulatory standards and procedures set out in Directive 2001/82/EC have been adapted through legislative amendments in response to scientific advances in the pharmaceutical regulatory environment and the needs of the veterinary sector. However, stakeholders and Member States have expressed concerns that the legislation as it stands nowadays does not meet the needs of the Union regarding the availability of medicines and treatments for veterinary use and does not fully achieve the realisation of the internal market for veterinary medicinal products.

In response to the concerns raised by stakeholders the Commission agreed to conduct an assessment of the problems in the application of the veterinary medicinal products Directive, in its declaration under the co-decision procedure concerning the proposal for a regulation on residue limits of pharmaceutical products in foodstuffs[1]. The revision of the regulatory framework for veterinary medicinal products is included in the Commission Work Programme 2013[2].

1.2. Stakeholder consultation

A wide online public consultation took place from April to July 2010. A total of 172 responses were received. A summary report, showing a breakdown of the responses by type of respondent, was published online, as well as individual responses (unless they were submitted confidentially).

In addition, qualitative and quantitative data were collected on the impact of the legislation between February 2011 and April 2011 through in-depth consultation with the national competent authorities, the main industry trade association and the main veterinary association from six countries (Cyprus, Finland, Germany, Poland, Romania and the United Kingdom).

Various specific consultations were also carried out with key stakeholders in the veterinary sector and the industry, through questionnaires, meetings and workshops. The consultation exercise was complemented by a series of targeted meetings with smaller groups of experts on pharmacovigilance, antimicrobial resistance, and authorisations/data protection. Another meeting was organised specifically with small and medium-enterprises and micro-enterprises (SMEs) to discuss their specific views and needs.

Contact with Third Countries took place through participation in conferences and through meetings of the International Cooperation on Harmonisation of Technical Requirements for Registration of Veterinary Medicinal Products (VICH) (a multinational programme between the EU, Japan and the USA). The points discussed at the VICH meetings were taken on board for the development of the options listed in this impact assessment.

The impact assessment builds on the report 'An assessment of the impact of the revision of veterinary pharmaceutical legislation' carried out by the European Policy Evaluation Consortium (EPEC). One EPEC member, GHK Consulting, carried out the study assisted by Triveritas. This report was commissioned by the European Commission and the study was carried out from November 2009 to June 2011.

Information collected for the preparation of the impact assessment is in Annexes 3 and 9.

1.3. Inter-service Steering Group

A Commission Inter-Service Steering group (ISG) on the impact assessment of the revision of the legislation was set up in 2009. Initially the project was led by the Directorate-General Enterprise, but following organisational changes the area of pharmaceutical veterinary medicines was transferred to Directorate General Health and Consumers. The ISG included the following participants: Commission Directorates General Agriculture and Rural Development, Environment, Industry and Entrepreneurship, Maritime Affairs and Fisheries, Research and Innovation, Trade and the Secretariat General. The group met on 9 October 2009, 17 November 2009, 8 December 2009, 11 June 2010, 8 October 2010, 9 June 2011, 16 April 2012, 17 September 2012 and 25 October 2012.

1.4. Scrutiny by the Commission's Impact Assessment Board

The impact assessment was scrutinised by the Impact Assessment Board (IAB) on 18 December 2012. In its initial opinion, the Board requested the following improvements to the report:

To better present the main problem, explain its drivers and support it with evidence; Improve the baseline scenario and better demonstrate the need to act; Improve the intervention logic and option design; Better assess and compare options; Improve monitoring and evaluation arrangements.

These points had been taken on board in the preparation of a new version of the report. In particular, this report concentrated on the problem of the lack of availability of medicines and its main drivers. The baseline scenarios regarding availability of medicines and the need to act were better explained, for example regarding the harmonisation of controls, retailing of medicines, novel therapies and antimicrobial resistance. The option design and intervention logic were modified to provide in depth analysis only for the more realistic options. The assessment of risk, and the cost and benefits of the policy options were better explored. The evaluation and monitoring arrangements were clarified.

The revised Impact Assessment was re-submitted to the IAB in July 2013 and some further changes were requested. The problem definition was strengthened and the analysis of the problem drivers streamlined by merging the description of market characteristics with the corresponding regulatory failures, i.e. merging multispecies market with legislation not suited to innovation, and pluri-national market with complex marketing authorisation requirements and procedures. A better explanation on the problems related to the current use of the Cascade was given under Section 2.3. The report was amended throughout, where relevant, to complement the views of industry with the views of national authorities and to better demonstrate the extent to which some of the regulatory requirements may be considered as unnecessary (as it is for example the case for the submission of periodic safety update reports).

To better demonstrate the need for harmonisation at the EU level regarding internet retailing, new treatments and clinical trials, the report was amended through footnotes 28-31 and in Annex 6. The report was also amended in section 2.4, footnote 47 and Annex 6 to explain how the current rules prevent authorities from prohibiting or restricting the use of antimicrobials; to provide more details on the "disharmonised decisions" (and views) of Member States and to clarify if the concern that veterinary surgeons can be "pressurised" to prescribe unnecessary antimicrobials is only a hypothetical one (footnote 43). Specific and operational objectives were listed for antimicrobial resistance under section 3.2.

The options were better explained and their impact analysed, for example, regarding the more flexible use of the Cascade (option 2); the basis for reduction of data requirements for certain products and how the corresponding risks would be managed (option 4); the aspects of harmonisation for national control systems, new treatments and clinical trials (options 14, 25, 26); how a criteria to define safety risk of "legacy" medicines could be defined (option 11), and how the authorisation of certain classes of antimicrobials could be restricted (option 28). These points were addressed in sections 5 and 6, and Table 11. An indication of the total implementation costs for the EU budget and the EMA is provided in section 5. The need to address the issue of medicines for bees is explained in Annex 7.

The report was amended throughout, where relevant, to better explain how the standards of public and animal health would be maintained should the preferred options be implemented and also to indicate how the concerns of national authorities have been addressed. The views of all relevant stakeholder groups, including farmers and consumer organisations, are presented in the Annex 9. The report also links the assessment of the options' effectiveness to the corresponding policy objectives in table 3. The benchmark for the suggested monitoring indicators (linked to the specific objectives) is in page 45.

2. Problem definition 2.1. Background

Veterinary medicines are regulated by Directive 2001/82/EC and Regulation (EC) 726/2004, from their manufacture to use, to ensure their quality, safety and efficacy and so safeguard animal and public health, whilst at the same time ensuring the functioning of the internal market for veterinary medicines[3].

The veterinary pharmaceutical sector is made of businesses involved in research and development of new veterinary medicines, manufacturers of veterinary medicinal medicines (including generics), importers, wholesalers and retailers. The veterinary pharmaceutical industry sales in Europe are estimated at 4.6 billion euros - 2005 prices (global sales represent over 13.4 billion euros in 2009). Around 14,600 people are directly employed by the veterinary medicines manufacturing industry in Europe.

The animal health market is divided into two sectors - farmed animals and companion animals - which are driven by different marketing rationales. The farmed livestock industry is a high volume market driven by economic, competition and food safety concerns, whereas the companion animal market represents a smaller market, but characterised by high value and high growth. It is also less prone to sudden market variations (such as those occurring from a sudden outbreak of disease) and linked to the changes to the purchasing power of pet owners[4]. More detailed information on the veterinary sector may be found in Annex 4; an overview of the regulatory framework for veterinary medicines is in Annex 5.

See Annex 2, Glossary, for an explanation on technical terms used throughout the impact assessment.

2.2. Problem identification

The private and public sectors have reported an overall lack of authorised veterinary medicines in the Union, for minor species[5] (in particular for bees – see Annex 7), for rare or emerging diseases and for the treatment and prevention of diseases in major species, as illustrated hereafter. There is a lack of certain veterinary medicines in all countries, but the availability of a number of medicines is a particular problem to some smaller Member States. This lack of authorised veterinary medicines poses significant problems for animals, their owners, farmers, veterinary surgeons, consumers and governments as the absence of treatments or the use of non-authorised treatments may result in[6]:

– Poorer animal health and welfare;

– Increased risk for public health due to the spread of untreated zoonosis, or through the exposure to residues of medicines;

– Negative economic consequences such as interruption of farming, compromised supply of foodstuffs (in case of disease outbreaks), economic and competitive disadvantage for EU farming, and trade implications when residues of unauthorised substances are detected[7],

– Legal implications for veterinary surgeons who prescribe medicines under the Cascade (e.g. where residues or unexpected animal losses occur).

See Annex 6 for further details of the problems with availability of veterinary medicines.

Examples of problems with veterinary medicines availability

Lack of veterinary medicines for minor species

FISH – There are no authorised medicines to treat any conditions in many of the food fish species farmed in the Union (sturgeons, perch, cod, char, turbot). There are on average 10 marketing authorisations per Member State (range from 0 to 29) for medicines for more established farmed species such as trout and salmon. This is very low compared to the number of marketing authorisations for medicines for dogs and chickens, for example (average 592 and 198 marketing authorisations per Member State respectively). There are no authorised vaccines against viral haemorrhagic septicaemia of salmonids (which can cause up to 80% mortality in fish), or medicines to conditions such as fish lice (Argulus sp), ichthyophthiriosis, fungal diseases (Saprolegnia sp), flatworms (mongenean infections), ulcerative dermatitis (Uronema sp).

The lack of veterinary medicines for use in aquaculture is highlighted in the Strategy for the future of the European aquaculture[8] as one of the major problems for the industry. In Europe, aquaculture accounts for almost 20% of fish production, with a turnover of roughly EUR 2.9 billion and generating some 65 000 jobs. The sector is expanding to farming of “new” species such as sea bass, sea bream, cod, sole, scallops and octopus and the lack of authorised veterinary medicines is affecting business. Since only seven applications were received for new marketing authorisation or for extension of existing marketing authorisations to include fish in the period 2006-2009, it can be assumed that this situation will not improve in the near future if there are no changes. Fish farmers indicated that treatment of diseases in fish is done almost completely with medicines used under the Cascade, but the statutory withdrawal period of 500 0C/days reduces the availability of some treatments when this is required in proximity of the harvest.

TURKEYS - Currently there is no treatment against histomoniasis (blackhead), a disease caused by the protozoan Histomonas meleagridis. This disease has high morbidity and mortality in turkeys, with serious consequences to the European turkey farming industry, as most infected birds die (there are reports that some farmers had to cull entire flocks due to infection).

Lack of veterinary medicines for emerging diseases

SCHMALLENBERG VIRUS. This virus is responsible for abortion and foetal deformities in sheep, goat and cattle and was initially identified in 2011 in Germany and in The Netherlands. By October 2012 it had been reported in 14 countries. A vaccine was authorised in one Member State in May 2013 (2 years after the initial outbreak) but this vaccine only has a provisional marketing authorisation and therefore cannot be mutually recognised in other Member States - to be placed on the market in the other 28 countries of the Union a marketing authorisation needs to be sought in each of these countries, resulting in further delays on the control of the disease.

Lack of veterinary medicines for the treatment of diseases in major species

PARASITIC WORMS present a significant production threat to grazing animals; their control is thus vital for animal health but heavily depends on the effectiveness of medicines (anthelmintics)[9]. Resistance of worms to the anthelmintics currently authorised in sheep, cattle, goats, horses is increasing at an alarming rate, and in some regions of Europe multi-resistance to the three major anthelmintic classes has already been identified. There are few anthelmintic products in the pipeline: only one new class of anthelmintic for sheep has been developed since the 80s, and livestock producers are left with few options for effective treatment.

2.3. Underlying drivers

The reasons behind the lack of available authorised veterinary medicines are various and are discussed below in detail. In summary, the high cost of developing a regulatory dossier and applying for a marketing authorisation combined with the constraints existing in the legislation regarding the data requirements for multi-species deter the development of new, needed veterinary medicines. In addition, post marketing authorisation requirements (such as variations and renewals), to maintain a product on the market become decision-points for keeping or abandoning well-established but low volume sales medicines. This situation has more profound effects on medicines for less common indications and for less common animal species (“minor use-minor species”), with virtually no authorised medicines for “new” food-producing species, such as cod or ostriches. As a result, veterinary surgeons have to result to extensive use of the Cascade. When medicines are used under the Cascade in food producing animal species, specific (statutory) minimum withdrawal periods have to be observed; in some cases these withdrawal periods are impractical, for example for animals with a short life span, thereby limiting the possibilities for treatment.

2.3.1. A multi-species and stagnant market

The veterinary pharmaceutical sector is driven by commercial returns obtained through the sales of veterinary medicines on the resources spent (from product development to placing it on the market). But the market is split between food producing animals and companion animals and both sub-sectors are multi-species: this results in a fragmented market.

Over 50% of the pharmaceutical market is based on the agricultural sector which is cost-sensitive, and is under pressure from global competition. The market can rarely return high prices for sophisticated medicines (expensive treatments cannot be afforded for routine use in production animals as the emphasis is on flock or herd health rather than individual animals). For livestock farmers animal treatment must be cost effective. For example, meat production is a price-driven market with intensive international competition[10], thus livestock farmers aim to reduce the share of the costs of veterinary medicines of their total operating costs. For companion animals, the purchasing power of the consumer equally affects the market price of medicines.

The confined, fragmented markets both for companion and farming animals drive the pharmaceutical sector to concentrate on larger markets which permit a positive return on investments[11]. The ‘top four’ markets for veterinary medicines are dogs, cattle, pigs and cats species. This translates directly into the number of marketing authorisations in the EU - 70 % of all marketing authorisations are for those species, with dogs having more veterinary medicines authorised than any other species (as companion animals provide a better return to investments than farmed species).

In addition, there is a concern, expressed both by regulators and the pharmaceutical industry, that the current veterinary pharmaceutical legislation is not suited to innovation. There has been considerable consolidation of the veterinary medicines industry over the last twenty years, with fewer than two dozen international companies remaining in the sector, and with the development of a very strong generic industry. It is reported that there is a decline in the number of applications for new veterinary medicines whilst there is a growth in the number of generic applications. The development of a generic product is less expensive than that of a novel product and therefore the potential return to investment for generics is behind the development of a strong generic pharmaceutical industry.

Another reason behind this shift from innovation to the manufacture of generic products is that the current data protection provisions do not take into account the difficulty found by veterinary sector in recovering investments spent in the development of novel veterinary medicines. The data protection period currently lasts for 10 years (13 years for bees and fish) , with an extra year of data protection granted per new food-producing species added within 5 years of the initial authorisation. Since 1991 the costs for new product development (total costs from discovery to first sales, including application procedure) have risen by 229% for food-producing animals, 173% for companion animals and 108% for minor species. The cost of developing a regulatory dossier which would meet European requirements for a major species has been estimated at 15-50 million euros, while for an additional indication it has been estimated at 2-6 million euros.

2.3.2. Costs to place a product on a pluri-national market

Prior to placing a veterinary medicine on the market, the applicant must obtain a marketing authorisation in all the countries where it intends to market it (Annex 5 describes the EU framework for authorisation of veterinary medicines). About 80% of the respondents to the public consultation were dissatisfied with the current regulatory environment.

The veterinary medicines legislation sets out the provisions concerning the scope and the procedures required for a marketing authorisation. Although the legislation has been amended[12], [13], [14], [15] to reduce administrative burdens, it still incurs in high costs to the industry regarding placing a veterinary medicine on the market. The total annual administrative burden imposed on business by the veterinary medicines legislation was estimated to be 537.9 million euros per year, which represents around 13% of the turnover of veterinary medicines sector - twice of that estimated for the human sector[16]. The table below summarises the costs incurred by the veterinary pharmaceutical industry.

Table 1: Break-down of overall administrative costs (resulting from staff time, overheads, equipment costs and outsourced costs (e.g. hiring an external expert to prepare a technical report) per activity per year

Activity || Administrative burden *[17] || % of the total administrative burden

Application for a marketing authorisation || 91.1 || 17

Packaging and labelling || 184.4 || 34

Applying for a variation to an existing marketing authorisation || 133.5 || 25

Marketing authorisation renewals || 69.5 || 13

Pharmacovigilance || 59.4 || 11

* million euros per year

The highest burden concerns packaging and labelling. The requirements are that the text must be written in all the official languages of the country where the product is to be placed on the market. This translates ultimately into companies deciding not to apply for authorisation in some Member States because the costs associated with the country-specific product labelling and packaging in the relevant national language(s) represents a too high expense to justify the operation in those countries. For example, in some countries such as Malta and Finland there are no veterinary medicines authorised for bees[18]. Some Member States such as Luxembourg and Austria have a large number of authorised medicines on their markets because they benefit from larger markets using the same language, such as France and Germany. But in general, the cost of small manufacturing runs for specific packaging and labelling outweighs the potential sales in smaller countries.

The cost of obtaining a marketing authorisation to place a product on the market is also high. Companies, often SMEs, decide to apply for a national authorisation to initially “test” their product on a market. To expand beyond those initial national borders, a re-assessment has to take place to obtain a marketing authorisation in other Member States even if the nationally marketed product has a record of safe use. This re-assessment is costly and burdensome both to the pharmaceutical companies and to the Member States and restrains companies from rolling-out their product across the EU.

Even the “rolling out” of authorisations granted in the past through the national route for products that have been on the market for many years in different Member States is difficult. These “legacy” products have been authorised with significant differences on the summary of product characteristics regarding indications and withdrawal period, for example. Although most of these products have a record of safe use, and have been on the market in the EU for many years, a scientific reassessment still has to take place for the product to be marketed in a new Member State. However, this dossier re-assessment (or the evaluation for an application for a generic, where the reference product is one of these “legacy” veterinary medicines) often results in referrals to arbitration, when Member States have a disharmonised view from the initial assessment or regarding the information placed on the summary of product characteristics. These referrals are costly - the pharmaceutical industry estimated the cost of a referral (Article 34 referral) as 445,000 euros.

During the public consultation Member states and the industry indicated that some current requirements and procedures (for example regarding authorisation of antimicrobials) generate unpredictability and disagreements between Member States and are only resolved through referrals (in particular regarding the mutual recognised and decentralised procedures); the limited scope of the centralised procedure and the high administrative burdens. SMEs also indicated that the current legislation does not set out harmonised procedures and timelines for the regulation of clinical trials across the EU, and so different national regulations have been put in place at national level. This lack of harmonisation is burdensome and costly for the companies, in particular regarding the setting up of multi-centric trials. Another area identified by SMEs as burdensome and unnecessary is the current legal obligation for pharmaceutical companies to place a product on the market within three years of its approval (the Sunset clause)[19].

The figure below shows the administrative burden to the industry incurred in complying with the legislation in order to place and maintain a veterinary medicine on the market. The decentralised procedure is the most costly procedure to companies, on average, and the centralised procedure is the least costly of the three European procedures. The national procedure generates the lowest administrative burden of all procedures.

Figure 1 Average administrative burden (in euros) per product per action, by marketing authorisation procedure

DCP – decentralised procedure; MRP- mutual recognition procedure; CP-centralised procedure; NP-national procedure

2.3.3. Complex requirements for keeping medicines on the market There are disproportionate costs of "mandatory defensive research" for keeping a medicine on the market (that is, the expenditure necessary to maintain existing products in the market as a result of legal requirements by the regulatory authorities, through variations, renewals and pharmacovigilance)[20]. More than 80% of European businesses consulted consider that the EU regulatory requirements are too burdensome and a barrier to innovation – and the most negative aspect causing an impact on business is the re-direction of resources for development of new medicines into defensive research[21],[22],[23]. The average costs spent on defensive research in the EU was estimated at 35 % of the total global R&D budget (26% in Canada and 14-16% for Australia, Japan and USA). The industry claimed that the continuing demands for defensive research have intensified the balancing act between investment in new products and maintaining existing products on the market[24].

The requirements for variations are cited as a persistent high cost of defensive research. The veterinary pharmaceutical industry considers the procedures to introduce variations to the terms of marketing authorisations very cumbersome, and responsible for around 25% of the total administrative burden (133.5 million euros per year). Although in recent years attempts have been made to simplify arrangements for variations, and since 2009 variations legislation has been harmonised across all four marketing authorisation procedures, the number of variations to marketing authorisations is still high[25].

Another factor incriminated as a disproportionate cost to the industry is pharmacovigilance requirements. Pharmacovigilance aims to monitor the performance of veterinary medicines placed on the market. The legislation requires marketing authorisation holders to maintain databases of all suspected adverse events in animals and humans related to the use of their veterinary medicines. The marketing authorisation holders are also required to report adverse events to the competent authorities and prepare reports on the overall performance of the products (periodic safety update reports - PSUR). Following the initial placing on the market, PSURs must be submitted immediately upon request or at the following intervals: 6-monthly for the first 2 years; annually for the subsequent 2 years; thereafter, at 3-yearly intervals. This frequency of reporting is considered excessive by both the pharmaceutical industry and some regulators, in particular those from smaller countries[26]. The current pharmacovigilance requirements are based on those applied to the human sector and cost around 59.4 million euros per year[27] to the veterinary pharmaceutical industry.

It is important to note that although regulators agree that administrative costs are high, there is a need to maintain procedures in place to ensure public and animal health and safety to the environment.

2.3.4. Lack of clarity in the legislation

The legislation lacks clarity regarding provisions on the retailing of prescription and non-prescription veterinary medicines over the internet or through mail order[28]. As a consequence, some Member States introduced national controls on online sales of veterinary medicines (e.g.: United Kingdom, Germany, Ireland), and others have no controls or forbid it (Austria and Belgium). This fragmentation reduces the potential benefits that retailers of veterinary medicines (in particular SMEs and micro-enterprises) could have from operating on a larger, EU-wide market and developing new services for consumers. In addition, owners of companion animals and farmers cannot benefit from the growth of the market which could lead to competitiveness and lower-priced veterinary medicines. It is clear that online sales of veterinary medicines could benefit substantially these end-users as retail and wholesale prices of medicines differ up to 50% between Member States[29].

New technologies and therapies for animal treatment are emerging from developments in the human sector[30], but the provisions in the veterinary legislation are not sufficiently clear regarding these treatments. Therefore, some Member States have developed their own systems at national level to regulate products such as blood and stem cells; on the other hand, other Member States have no regulation on these areas and consider these treatments as clinical practice (e.g., Sweden). The current situation creates a fragmentation of the internal market and a problem of availability of such therapies in some countries, and overall a disharmonised approach to animal health and welfare in the Union[31].

Effective disease control requires a fast response, but the current legislation does not allow an effective, rapid response to a new or re-emerging animal health threat at a pan-European level. In this situation, veterinary medicines are authorised at national level in some Member States – those which have developed fast-track procedures to authorise medicines in exceptional circumstances. This creates an un-level playing field in the Union, which is particularly detrimental to farmers.

In addition, no harmonised legal framework exists at EU level regarding the way controls, including inspections of wholesale dealers and retailers, are organized and carried out by Member State competent authorities throughout the distribution chain of veterinary medicinal products. Consequently there is no uniformity throughout the Union on the application of such controls, and this generates an un-level playing field across the Union. For example, some Member States have not fully implemented or correctly transposed the requirements of the veterinary medicines legislation[32]. This represents a risk for animal safety and public health and causes distortion of competition in the Community, detrimental to the operation of the internal market[33].

Annex 6 provides further information on the drivers behind the lack of availability of veterinary medicines.

Problem tree: Lack of availability of veterinary medicines

2.4. Contribution to the fight against the development of resistance to antimicrobials

Antimicrobial resistance has increased in importance worldwide in recent years. It is reported to cause many deaths (25,000 patients die each year in the EU from infections caused by resistant bacteria) and great financial costs (extra health care costs and productivity losses were estimated as of at least 1.5 billion euros per year) in the human health care setting. According to the World Health Organisation, common, yet life-threatening infections caused by resistant bacteria are becoming difficult or even impossible to treat. The problem is aggravated by the scarcity of new antimicrobials being developed, which limits treatment options for patients with infections caused by multidrug-resistant organisms[34],[35].

The Parliament and the Council have voiced their concerns regarding the problem of antimicrobial resistance. The Commission considers antimicrobial resistance a public health threat[36] and adopted an action plan to address the problem. This action plan list as key actions (regarding veterinary medicines):

– Action n° 2: Strengthen the regulatory framework on veterinary medicines and on medicated feed via the review package foreseen for 2013;

– Action n° 7: Promote efforts to analyse the need for new antibiotics into veterinary medicine;

– Action n° 10: Strengthen surveillance systems on antimicrobial resistance and antimicrobial consumption in animal medicine.

Antimicrobial resistance in animals can be transmitted to humans through zoonotic diseases. The importance of animals and of food of animal origin in the emergence, spread and persistence of antimicrobial resistance in humans has not yet been completely established[37] but the inappropriate therapeutic use and the non-therapeutic use of antimicrobials in animals (such as use of antimicrobials to mask poor farm management or inadequate zootechnical practise) is considered to be one of the drivers for the development of resistance in the human sector[38].

Human medicines and veterinary medicines including antimicrobials are regularly used for non-approved indications and with non-approved dosages under the Cascade[39]. This ensures animal treatment but there is a concern that this practice, and in particular the use of last resort human antimicrobials, may contribute to the rise of antimicrobial resistance in humans. Another area of concern is the carry-over of antimicrobials in the production of medicated feed. This is out of the scope of this impact assessment but is addressed through the revision of the medicated feed legislation.

It is acknowledged that the current veterinary medicines legislation does not provide sufficient tools to ensure that risks to human health arising from the use of antimicrobials in animals are adequately managed, as the assessment process is based on data presented (product-specific). For example, there are no legal provisions to allow regulators to prohibit or place restrictions on the authorisation for animals of certain classes or groups of antimicrobials that are considered reserved for the treatment of human infections. As a consequence, these types of antimicrobials may be authorised in some Member States but not in others, or may be authorised and used under different conditions. This creates difficulties for the implementation of a holistic strategy to the control of antimicrobial resistance in the Union. The legislation also does not allow the prohibition or the restriction of the use of antimicrobials under the Cascade, and this also hampers the prudent use of antimicrobials in veterinary medicine. In addition, legislative and non-legislative national measures have been put in place at national level as an effort to tackle antimicrobial resistance, thus creating disharmonised decisions in the Member States which generate a constant stream of referrals for arbitration [40]. Furthermore, the different approaches regarding prescription, use and distribution of antimicrobials in the Member States hamper efforts to deal with the problem of antimicrobial resistance in a holistic manner in the EU. There is also a concern that the advertising of antimicrobials, under the disguise of informative material, enables or induce farmers and companion animal owners to pressurise veterinary surgeons to prescribe unnecessary antimicrobials or prescribe unsuitable (but convenient) antimicrobials, which leads to an overuse of these medicines[41].

For those reasons, although this is not directly related to the availability of veterinary medicines, the issue of antimicrobial resistance will be addressed as part of the revision of the veterinary legislation, in accordance with the actions of the Commission Action Plan against the rising threats of antimicrobial resistance.

Further discussion on the issue of antimicrobial resistance is included in Annex 6.

2.5. Principles of Conferral, Subsidiarity and Effectiveness (added value) tests

The primary purpose of the legislation is to ensure the quality, safety and efficacy of the veterinary medicines to safeguard public and animal health and safety to the environment. But this objective must be achieved without hindering the development of the industry and trade of veterinary medicinal products within the EU.

Legislation in the area of internal market (Art 114 TFEU), and regarding common safety concerns in public health matters and standards of quality and safety for medicinal products (Art 168(4) (c) TFEU) is a shared competence between Union and Member States. The current EU legislation on veterinary medicines, Directive 2001/82/EC and Regulation (EC) No 726/2004, based on Article 95, and Articles 95 and 152 (4)(b) of the TEC respectively, provide the legal environment on authorisation, production, marketing, distribution and use of veterinary medicines. The existing legislation on veterinary medicines brought some harmonisation to the procedures and rules required to place veterinary medicines on the EU market but there is evidence that the existing provisions do not completely deliver the ambition of a functioning internal market and do not match the current needs of the veterinary sector.

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:

"A stronger, deeper, extended single market is vital for growth and job creation…. Every day businesses and citizens are faced with the reality that bottlenecks to cross-border activity remain despite the legal existence of the single market. They realise that networks are not sufficiently inter-connected and that the enforcement of single market rules remains uneven. Often, businesses and citizens still need to deal with 27 different legal systems for one and the same transaction."

To fully achieve a strong internal market on the area of veterinary medicines, there is a need to simplify and streamline across the Union the regulatory system for the authorisation of veterinary medicines, removing inefficiencies and barriers to cross border trade. This would improve the availability of medicines thus benefiting the veterinary sector in general, from manufacturers to the end users (farmers and the general public).

3. Objectives 3.1. General objective

In accordance with the Treaty, the objective of this proposal is to ensure a high level of public health protection, high standards of quality and safety of veterinary medicines and the optimal functioning of the internal market.

3.2. Specific and relevant operational objectives

Increasing the availability of veterinary medicines would contribute to achieving the overall goal of the proposal. Furthermore, using this opportunity to contribute to mitigating the risk of development of antimicrobial resistance would further reinforce the ambition of a high level of public health protection.

In practice, improving availability of veterinary medicines would require improving the regulatory environment to:

1) simplify it and reduce administrative burdens whilst maintaining safeguards to ensure public and animal health, safety to the environment and allowing more accessible use of medicines to fill therapeutic gaps via an improved Cascade;

2) foster the development of new medicines, including for minor use-minor species, while keeping those already on the market;

3) facilitate the circulation of veterinary medicines across the EU, through better authorisation procedures, and via new forms of retail such as internet.

This would translate in the following specific and operational objectives below:

Table 2 Framework on veterinary medicines - drivers and objectives

Lack of availability of veterinary medicines

Drivers || Specific objective || Operational objectives (OO)

Multi-species market || A Expand market beyond the top four animal species || A.1. Improve the use of the Cascade

A.2. Improve information on authorised veterinary medicines available in the Union

A.3. Simplification of application requirements for veterinary medicines for limited markets

E1. Strengthen data protection incentives

Pluri-national market || B. Simplify procedures for obtaining a marketing authorisation in multiple national markets || B.1. Review centralised, decentralised and mutual recognition procedures

B.2. Revision of the situation with “legacy products”

Complex authorisation requirements || C. Review data requirements in marketing authorisation procedures || C.1. Revision of environmental requirements for generics

C.2. Revision of provisions for authorisation of clinical trials

Complex requirements for keeping medicines on the market || D. Simplify post authorisation requirements || D.1. Simplification of pharmacovigilance

D.2. Simplification of variation requirements

D.3. Revise the Sunset clause

D.4. Abolish renewals

D.5. Simplify requirements for homeopathics

Legislation not suited to innovation || E. Review incentives for breakthrough medicines || E1. Strengthen data protection incentives

Lack of clarity in the legislation || F. Improve clarity: on rules on internet retailing of veterinary medicines || F.1. Specify rules for internet retailing of veterinary medicines

on the authorisation of new treatments || F.2. Specify rules for new treatments

on inspections || F.3. Harmonise national control systems

on authorisation of medicines for emerging diseases || A.3. Simplification of application requirements for veterinary medicines for limited markets

The issue of antimicrobial resistance, recognised worldwide as an important public health threat, is not directly related to the availability of veterinary medicines. However, in response to concerns raised by the Parliament and the Council, the Commission adopted an action plan to tackle this problem in a holistic manner. This plan includes actions related to the authorisation and use of veterinary medicines and, therefore, it is proposed to address the issue of antimicrobial resistance in the context of the regulatory framework for veterinary medicines, focusing on the authorisation and use of antimicrobials in this area. The specific objective is an overall strengthening of the veterinary medicines' regulatory framework regarding the authorisation and use of antimicrobials which would contribute to lowering the risks to public and animal health. The operational objectives are the introduction of proportionate measures regarding the authorisation and use of antimicrobials and of measures to ensure an efficient surveillance system on the use of veterinary antimicrobials.

3.3. Consistency with other EU policies and horizontal objectives

The objectives listed are coherent with the EU and the Commission's strategic principles, in particular regarding decreasing administrative burden[42], simplifying the regulatory environment[43] and putting in place measures to complete the internal market[44] for veterinary medicinal products. This assessment is in addition conducted in parallel to that for the revision of the medicated feed and is consistent with the proposed revision of the EU system of official controls along the food chain, and the policies on animal health[45].

4. Policy options 4.1. Baseline scenario – "no EU action"

The baseline scenario for this impact assessment consists of no changes to the current regulatory framework ("no EU action"). Consultation with stakeholders indicated that, if there is no EU intervention, the problems described would continue to exist and the trend towards divergent national action is likely to continue. Duplication of efforts, the setting of different standards and the introduction of more administrative complexity to the regulatory system would remain.

The problem with the availability of authorised medicines would continue or even worsen, presenting risks to animal health and welfare from existing and emerging diseases. The continued lack of availability of authorised veterinary medicines would lead to animal health and welfare consequences – and public health would also be at risk, as there is a link between animal diseases and public health. The lack of suitable authorised medicines, in particular to minor species, would force veterinary surgeons to resource more often to using medicines under the Cascade[46], increasing the potential public and animal health risks (as the use of medicines under the Cascade is not supported by specific safety and efficacy studies on their effects). No EU action also would mean that the public health threat of antimicrobial resistance would not be addressed through clear legal tools and would continue to be tackled by Member States without a holistic, consistent approach across the Union.

Further innovations are anticipated regarding the application of new technologies in veterinary medicine, such as gene therapy. At present these new types of treatment are not clearly defined within the legislation, causing confusion as to how they should be treated as part of the authorisation process[47]. If no EU action is taken, it is likely that this uncertainty will remain, with an uneven approach to animal treatment across the EU.

Due to different interpretations of the legislation, the rules on internet retailing of veterinary medicines vary widely in the Member States, leading to legal uncertainty. It also leads to an un-level playing field for businesses as internet retailers of veterinary medicines can be established in some but not all Member States; it also impacts on the pricing of veterinary medicines across the Union through interference with competition[48].

Control systems related to veterinary medicines are organised and carried out by Member States, and significant variations in the level and effectiveness of controls have been noted[49]. No EU action would mean that this disharmonised situation would remain.

If the option "no EU action" is adopted, situations like these described would continue to exist. On the other hand, action at EU level to draw up a harmonised and proportionate system to regulate the manufacture, distribution, possession, prescription, dispensing, administration and use of veterinary medicines would create a predictable legal environment, beneficial to innovation and to the availability of veterinary medicines. It would also prevent Member States from taking action which would result in a further fragmentation of the internal market.

The "no new EU action" option has been taken as the baseline against which the policy options proposed below were measured to evaluate their potential impacts.

4.2. Policy options regarding lack of availability of veterinary medicines

The policy options considered most realistic are discussed below. For easy of reading, the options are grouped by specific objectives. Some of the options are alternative and some address more than one specific objective. “No new EU action” has always been taken into consideration as a possible option.

4.2.1. Policy options to expand the market beyond the top four animal species

The options discussed here concern the use of the Cascade, provision of information on the veterinary medicines authorised in the EU, the granting of MAs for limited markets, and innovation (operational objectives A1, A2, A3 and E1).

Specific objective || Operational objectives (OO) || Options

A. Expand market beyond the top four animal species || A.1. Improve the use of the Cascade || 2 - Improve the Cascade

A.2. Improve information on authorised medicines available in the Union || 3 - Expand database to cover all veterinary medicines

A.3. Simplification of application requirements for veterinary medicines for limited markets || 4 – Reduced data requirements for MA for limited markets

E1. Strengthen data protection incentives || 5 - Reduced data requirements for medicines for bees

Option 1 - No new EU action

This option proposes no regulatory changes.

Option 2 - Improve the Cascade (OO A.1)

Currently veterinary surgeons must follow a ranking system to choose a medicine for use under the Cascade; the veterinary surgeons must also follow the withdrawal period set in legislation, if the animal under treatment is a food-producing species. This policy option proposes to abolish the ranking system to introduce more flexibility and so allow veterinary surgeons to choose the best available treatment to the animal under their care. The option also proposes to modify the way withdrawal periods are determined for use under the Cascade, so that a system based on multiplication factors is used taking into account any withdrawal period information available for the product.

Option 3 – Expand database to cover all veterinary medicines (OO A.2)

This option proposes to create a legislative requirement for the compulsory uploading of information on all marketing authorisations into a single, comprehensive EU database. This database would be linked to the already existing pharmacovigilance database (Eudravigilance).

Option 4 – Reduced data requirements for medicines for limited markets (OO A.3)

This policy option would introduce regulatory changes to allow applicants to submit applications with reduced data for certain products. The type of data that could be omitted would be decided on the scientific advice of the EMA, so that any safety risks are analysed and taken on board. This option aims to fill therapeutic gaps on the market for limited markets (minor uses and minor species), and to allow the authorisation of veterinary medicines in case of urgent need. This option also relates to specific objective F.

Option 5 – Reduced data requirements for medicines for bees (OO E.1)

This option proposes to reduce the quality and efficacy requirements for applications for bee medicines. In addition, this option proposes to allow veterinary surgeons, under their direct personal responsibility, to treat bees with medicines that are authorised in certain Third countries during the time period that no honey flow takes place. This would only be allowed if no authorised medicine exists in the EU for the disease and the use of the Cascade is not appropriate.

4.2.2. Policy options to simplify procedures for obtaining a marketing authorisation in multiple national markets

The options discussed here concern the authorisation procedures and the management of the problem with “legacy products” (operational objectives B1 and B2).

Specific objective || Operational objectives || Options

B. Simplify authorisation procedures || B.1. Review CP, DCP and MRP procedures || 7 – Automatic recognition of a national MA

8 – Single MA procedure for all products

9 – Wider scope for the centralised procedure

10 – Simpler packaging and labelling

B.2. Revision of situation with “legacy products” || 11 – Already nationally approved medicines allowed to freely circulate across the Union

Option 6 - No new EU action

This option proposes no regulatory changes.

Option 7 - Automatic recognition of a national marketing authorisation (OO B.1)

This option is to allow an application for a marketing authorisation to be assessed and issued by a Member State and made valid automatically throughout the Union. Pharmaceutical companies seeking to have a product authorised would be free to submit an application to any of the national competent authorities and, if approved, an authorisation would be granted entitling the product to be marketed anywhere within the EU.

Option 8 - Single marketing authorisation procedure for all products (OO B.1)

This option proposes that a single dossier is submitted to a committee composed by representatives from the Member States which then would assign an assessment team to evaluate its scientific contents. Once the assessment is concluded (and if positive), a single decision would be adopted by the Commission or an authorisation issued by all Member States. The pharmaceutical company then would be free to place the product on the market in all or on some Member States only, depending on its commercial strategy.

Option 9 – Wider scope for the centralised procedure (OO B1)

This option maintains the mandatory use of the centralised procedure for innovative medicines (as it is the case under the current legislation) and proposes to extend the scope of this procedure to make it available, upon choice by the applicant, to all types of veterinary medicines. To make the centralised procedure more accessible to SMEs, the option also proposes the introduction of a legal obligation to national authorities to introduce supportive measures (e.g., a help desk) to veterinary SMEs which intend to apply for a marketing authorisation through this procedure.

Option 10 – Simpler packaging and labelling (OO B.1)

This option is to simplify the packaging and labelling of a veterinary medicinal product, which is part of the marketing application dossier. The use of pictograms and abbreviations would be allowed as much as possible to reduce the amount of written text, whilst still ensuring the safety of the product. Leaflets would still be required and the pharmaceutical companies would be allowed to provide information to veterinary surgeons and the public by other means (e.g. barcodes) too. The national authorities would no longer pre-approve the packaging and labelling layout of veterinary medicinal products. Under this option, the national authorities would be able to authorise the use of a non-official language on the packaging and labelling of the medicines placed on the market in their territory, if they so wish.

Option 11 – Already nationally approved veterinary medicines allowed to freely circulate across the Union (OO B.2)

This option proposes the “rolling out” to other countries of “legacy” veterinary medicines which already have national marketing authorisations in the EU. This would be carried out through a review, which would harmonise the summary of product characteristics of these products, allowing the widest scope possible (that is, taking on board all the indications and target species granted in all Member States). The decision on which products would require assessment prior to harmonisation would be carried out by a scientific committee, to ensure the safety of the product. The proposal also includes an option for pharmaceutical companies to join efforts to generate data if necessary, to be compiled in the form of a monograph (to cover gaps on data regarding environmental safety, for example).

4.2.3. Policy options to review data requirements in marketing authorisation procedures

The options discussed here concern provisions for the authorisation of veterinary medicines (operational objectives C1 and C2).

Specific objective || Operational objectives (OO) || Option

C. Review data requirements for marketing authorisation procedures || C.1. Revision of environmental requirements for generics || 13 – Generics applications may refer to environmental data

C.2. Revision of provisions for authorisation of clinical trials || 14 – Harmonisation of clinical trials procedures across EU

Option 12 - No new EU action

This option proposes no regulatory changes.

Option 13 – Generic applications may refer to environmental data (OO C.1)

This option proposes to allow pharmaceutical companies applying for generic veterinary medicines to refer to environmental data as part of the safety dossier package, which already is no longer required for a generic application. Therefore a generic application would not require submission of data on environmental safety, as it is currently the case. Instead, pharmaceutical companies would have the possibility to take advantage of a system of data sharing between applicants, so that a report (monograph) could be generated to address environmental risk concerns.

Option 14 – Harmonisation of clinical trials procedures across the Union (OO C.2)

This option proposes to harmonise the timelines for the authorisation of clinical trials for veterinary medicines in the Union, which currently are not harmonised.

4.2.4. Policy options to simplify post authorisation requirements

The options discussed here concern, variations, the sunset clause, renewals and pharmacovigilance requirements (including for homeopathics) (operational objectives D1, D2, D3, D4 and D5).

Specific objective || Operational objectives (OO) || Options

D. Simplify post authorisation requirements || D.1. Simplification of pharmacovigilance || 16 – Risk-based pharmacovigilance

D.2. Simplification variation requirements || 17 – Review procedures to change a marketing authorisation (variations)

D.3. Revise sunset clause || 18 – Delete the obligation to market a product within 3 years of approval

D.4. Abolish renewals || 19 – Delete requirements for renewals

D.5. Simplify requirements for homeopathics || 20 – Exempt homeopathic medicines from pharmacovigilance requirements

Option 15 - No new EU action

This option proposes no regulatory changes.

Option 16 – Risk-based pharmacovigilance (OO D.1)

This option proposes a risk-based approach to pharmacovigilance, where certain requirements (e.g. submission of repeated period safety update reports) that do not contribute effectively to public health, animal health or the protection of the environment are abolished. Pharmaceutical companies would have the responsibility to collect and introduce adverse event reports into an EU pharmacovigilance database and to analyse these data at product level through signal detection. This option would also introduce the concept of a Pharmacovigilance Master File dossier containing information on the pharmaceutical company's systems. Therefore, this option would remove the requirement for the description of the pharmacovigilance system to be placed on the dossier for each marketing authorisation application.

Option 17 – Review procedures to change a marketing authorisation (variations) (OO D.2)

This option proposes a risk-based approach to deal with variations to a marketing authorisation. Those variations which do not introduce changes that might substantially affect the product safety would not require scientific assessment. Other changes would still require prior authorisation by the competent authorities before implementation.

Option 18 – Delete the obligation to market a product within 3 years of approval (OO D.3)

The option proposes the removal of the Sunset clause (an existing obligation to market a medicine within three years of granting the marketing authorisation) from the legislation.

Option 19 – Delete the requirement for renewals (OO D.4)

This proposal is to abolish the general renewal requirements for veterinary medicines but maintain a renewal for specific marketing authorisations, granted to veterinary medicines submitted for assessment without a complete data dossier.

Option 20 – Exempt homeopathic veterinary medicines from pharmacovigilance requirements (OO D.5)

This option proposes to exempt veterinary homeopathic medicines from the requirements concerning pharmacovigilance.

4.2.5. Policy options for breakthrough medicines

The option discussed here concerns data protection (operational objectives E.1).

Specific objective || Operational objectives || Option

E. Review incentives for breakthrough medicines || E. 1 Strengthen data protection incentives || 22 – Extend data protection period for new veterinary medicines

Option 21 - No new EU action

This option proposes no regulatory changes.

Option 22 - Extend the data protection period for new veterinary medicines: (OO E.1)

This option proposes an initial period of data protection of ten years with extensions to a new species receiving an added period protection of three years. The maximum period of data protection would be twenty years. The option would also create particular provisions for medicines for minor species, such as fish (products would receive an initial data protection period of fifteen years). A provision to particularly benefit the development of medicines for bees would be introduced: veterinary medicines initially authorised for bees would have an automatic initial period of data protection of twenty years, and any extension to a marketing authorisation to add bees as target species would have a data protection period of five years. To incentivise the development of novel antimicrobials specifically developed for use in veterinary medicine, these products could receive an initial data protection for fifteen years, and extensions to new species could receive five years data protection.

This option also supports the Specific objective A - Expand the market beyond the top four animal species.

4.2.6. Policy options to clarify rules on internet retail, on the authorisation of new treatments, on inspections and on authorisation of medicines for emerging diseases

These policy options address problems regarding lack of clarity on the legislation regarding internet retailing of veterinary medicines, new treatments and treatments in case of outbreaks (operational objectives F1, F2, F3 and A3).

Specific objective || Operational objectives || Options

F Improve clarity: on internet retailing of veterinary medicines || F.1. Specify rules for internet retailing of veterinary medicines || 24 – Authorisation to sell veterinary medicines through the internet in all MS

on the authorisation of new treatments || F2 Specify rules for new treatments || 25 – Establish a framework to authorise new treatments

on inspections || F3. Harmonise national control systems || 26 – Establish a basis to harmonise the controls on the veterinary medicine distribution chain

on authorisation of veterinary medicines for emerging diseases || A3. Simplification of application requirements for veterinary medicines for small markets || 4 – Reduced data requirements for veterinary medicines for limited markets

23 - No new EU action

This option proposes no regulatory changes.

Option 24 – Authorisation to sell veterinary medicines through the internet in all Member States (OO F1)

This option proposes the introduction of a requirement for the authorisation at national level of internet retailers wishing to sell prescription and non-prescription veterinary medicines in the Union. This authorisation would be valid across the EU.

Option 25 – Establish a framework to authorise new treatments (OO F.2)

This option proposes to set out in the legislation a framework for the authorisation of new treatments (e.g. stem cell treatments), indicating the data requirements and exemptions relevant to the area. In order to keep flexibility, important in this fast growing area, detailed scientific and technical requirements drawn out by the EMA would be placed in guidance.

Option 26 – Establish a basis to harmonise the controls on the veterinary medicine distribution chain (OO F3)

This option is to create a harmonised legal framework regarding the way controls on the distribution chain of veterinary medicine are organised and carried out by Member States' competent authorities.

Option 4 – Reduced data requirements for veterinary medicines for limited markets (OO A3)

This policy option would create the possibility to reduce some data requirements for certain types of veterinary medicines, to fill therapeutic gaps on the market for minor uses and minor species, or to allow the authorisation of veterinary medicines in case of urgent need. This would be done based on scientific advice from the EMA. This option also relates to specific objective A.

4.3. Additional policy options to strengthen the veterinary medicines legislation regarding the authorisation and use of veterinary antimicrobials in veterinary medicine

27 - No new EU action

This option does not imply any regulatory changes.

Option 28 - Introduction of legislative measures to allow restrictions to be placed on the authorisation and use of veterinary antimicrobials

This option is to introduce specific legislative requirements regarding the authorisation of antimicrobials and their use under the cascade. These requirements would refer to the submission and assessment of data for applications for veterinary medicines containing certain types or classes of antimicrobials, in connection with antimicrobial resistance. It would allow the competent authorities to decide, based on scientific advice drawn by the EMA, whether or not a) a class of antimicrobials of importance for human health may be authorised for use in animals and b) if it may be authorised, under which specific conditions. This option would provide that a decision could be taken even if a causal relationship between the potential use of veterinary antimicrobials and antimicrobial resistance in humans cannot be fully established at the time of assessment due to incomplete scientific knowledge in the area. As part of this proposal, authorities would be also able to prohibit or restrict the use of certain antimicrobials under the Cascade, based on scientific advice prepared by the EMA. Veterinary surgeons would be allowed to supply antimicrobials to animals under their care only.

Option 29 - Measures regarding advertising of veterinary medicines, including antimicrobials

The option is to clarify the current provisions on the advertising of veterinary medicines, including antimicrobials, aiming to ensure that marketing activities would not lead to the misuse of prescription medicines.

Option 30 - Measures regarding retailing of veterinary antimicrobials

The option proposes to allow veterinary surgeons to prescribe antimicrobials to the animals under his/her care but introduce a prohibition on the supply of these medicines.

Option 31 - Introduction of a legal basis for the compulsory collection of data on the use of antimicrobials

The proposal is to establish a harmonised and compulsory European system for collection of data on the sales and usage of antimicrobials in food-producing animals.

4.4. Options discarded at an early stage

The following options were discarded, as they were considered unfeasible, ineffective or would create unacceptable risks to animal or public health or to the environment:

To completely abolish pharmacovigilance requirements; To replace the authorisation of low risk and generic veterinary medicines with a registration system; To make the centralised procedure compulsory to all veterinary medicines; To introduce exemptions to reduce legislative requirements regarding authorisation of veterinary medicines by pharmaceutical companies that are SMEs or micro-enterprises; To voluntarily harmonise the summary of product characteristics of the “legacy products; To standardise the distribution of veterinary medicines across the Union; To forbid generic applications for antimicrobials; To re-classify bees as non-food animals; To develop "soft law instruments" to achieve policy changes.

See Annex 10 for a detailed explanation on the discarded options.

5. Analysis of impacts

The policy options to address the problems highlighted in the report are largely compatible from the perspective of an overall policy package (to simplify the regulatory environment, to reduce administrative burdens and to complete the internal market) but their simultaneous implementation may impact on costs and savings to stakeholders and regulators. The options were evaluated for their costs and benefits to the affected sectors based on the evidence obtained from the consultation exercises. For each option, consultees’ views are referred to if expressed during the public consultation (consultees’' views are presented in Annex 9).

Monetised costs and benefits were based on assumptions; sometimes they were not available or accurate due to lack of key data. This is indicated in each case. The baseline was "no new EU action".

See Annex 11 for a table showing a comparison of the costs and benefits of the policy options, and a table depicting their effectiveness, efficiency and coherence[50] with EU objectives.

5.1. Costs and benefits of options to expand the market beyond the top four animal species 5.1.1. Option 1 - No new EU action

As this option would not imply any change to the provisions already existing in the legislation, costs and benefits are expected to stay identical.

5.1.2. Option 2 - Improve the Cascade

It was clear from the consultation that the Cascade is important in veterinary medicine, and contributes to increase the availability of medicines in particular for limited markets (minor uses and minor species).

When medicines are used under the Cascade in food producing animal species, statutory minimum withdrawal periods must be observed. In some cases these withdrawal periods are impractical, for example for animals with a short life span, thereby limiting the possibilities for treatment. The option to improve the use of the Cascade is based on a CVMP’s proposal. It would replace the current statutory withdrawal periods with a system based on safety factors which calculates the minimum withdrawal period that would still ensure food safety. In addition, the option proposes to abolish the current ranking system which determines the choice medicine for use under the Cascade, so that veterinary surgeons would have more freedom to choose the best medicine for the animal under their care.

Some national authorities and the pharmaceutical industry remarked that a liberal use of the Cascade, even for companion animals, might pose a risk to animal health and also lead to an increase in the inappropriate use of antimicrobials. However, the proposal allows more freedom to veterinary surgeons to choose the best available treatment for sick animals, by way of an exception, in the absence of suitably authorised veterinary medicines. This choice is carried out in accordance with a veterinary surgeons' professional judgment, and for animals under his/her care, thus ensuring animal and public health and environmental safety. Therefore the risks of misuse of the Cascade would not increase from the baseline. This policy option has no impact on administrative burdens to the industry.

5.1.3. Option 3 – Expand the database to cover all veterinary medicines

This option would introduce a requirement for the compulsory uploading of data on all marketing authorisations to an EU database. The major benefit of this option would be an improvement on the transparency within the authorisation system. The availability of an up-to-date database of authorised veterinary medicines, readily accessible across the Union, would help with the effective operation of the Cascade so that veterinary surgeons in one Member State may identify the needed veterinary medicines available from other Member States. Therefore, ultimately this policy option would benefit the protection of animal and public health in general. A complete and up-to-date database of authorised veterinary medicines would also be a valuable tool for the pharmaceutical industry, to map the veterinary medicines on the market in the Union and therefore better target their R&D investments. The implementation of this option would lead to unquantified costs to the national authorities or pharmaceutical industry concerning the uploading of information on the marketing authorisations to the database. However, this may be balanced by a reduction in costs related to informing the EMA about the relevant national marketing authorisations falling in the scope of a referral, for example. The option would have a positive impact on the functioning of the internal market.

5.1.4. Option 4 – Reduced data requirements for veterinary medicines for limited markets

This proposal would reduce administrative burdens to the pharmaceutical industry regarding the preparation of a dossier for a marketing authorisation for medicines aiming to fill therapeutic gaps. This would be particularly beneficial to farmers, as medicines, in particular vaccines, could be quickly placed on the market in the event of emergency. The proposal would be beneficial to animal health and welfare and to public health.

5.1.5. Option 5 – Reduced data requirements for medicines for bees

This proposal is to allow regulators to wave some data requirements for the authorisation of medicines for bees, if the data are not considered essential to the safety of the product. The option could benefit the availability of medicines for this species by reducing the costs of product manufacture and the preparation of the application dossier. The proposal also envisages to allow the use in the EU of medicines for bees authorised in some Third Countries, with the treatment being carried out when no honey production takes place (to avoid the risk of residues in honey).

5.2. Costs and benefits of options to simplify authorisation procedures 5.2.1. Option 6 - No new EU action

As this option would not imply any change to the provisions already existing in the legislation, costs and benefits are expected to stay identical.

5.2.2. Option 7 - Automatic recognition of a national marketing authorisation

This option would reduce the administrative burdens to pharmaceutical companies (estimated savings of 67.9 million euros per year)[51]. These reduced costs would be particularly beneficial to SMEs/micro-enterprises as they could start business by placing a product on a national market and then progressively expand to reach other markets.

The success of this option would depend on Member States. The lack of peer review is a concern to some Member States, which fear a possible reduction in the quality of the current assessment standards. Although all Member States would be working to the same legislation and guidelines, differences in resources, expertise, policy context and geographical animal health status might affect the focus of the assessment of the data presented in the application dossier, rendering the opinion of a specific competent authority not acceptable to others. This could lead to a high number of referrals to the CVMP. Such situation may occur even despite the existence of a voluntary accreditation programme of the national authorities. This option would favour the free movement of veterinary medicines in the Union.

5.2.3. Option 8 - Single marketing authorisation procedure for all products

This option is estimated to have a positive impact on the simplification of the regulatory framework, and significantly reduce the administrative burdens imposed by the legislation. If this option is implemented it would cut an estimated 67.9 million euros each year to the pharmaceutical industry[52]. This option is supported by the pharmaceutical industry and other consultees[53].

Unlike the current European centralised procedures, this policy option does not include any element of peer review for the assessment of the application dossiers. This peer review process requires additional resources and is time consuming, but also provides quality assurance at the level of individual marketing authorisation assessment. As for option 7, many regulators expressed concerns regarding this lack of peer review, even if a proposed independent EU body is created to assess the quality assurance systems of the organisations that are responsible for carrying out scientific assessments. Member States remarked that this option would not be able to ensure the quality of the assessment process, which also would not be able to take on board geographical and policy differences in different countries. This might have a negative impact on animal and public health, and safety to the environment. However, it was recognised that this option would improve the functioning of the internal market.

5.2.4. Option 9 – Wider scope for the centralised procedure

This option combines the mandatory use of the centralised procedure for innovative medicines, as it is currently the case, and makes this procedure optional to all other types of veterinary medicines. In the public consultation more than 85% of the respondents favoured extending the scope of the centralised procedure. The SMEs/micro-enterprises consulted expressed their support for this proposal, as it introduces flexibility and choice into the system but indicated that they would still be inclined to use more the centralised procedure if the procedure is made more SME-friendly, by for example, the introduction of national helpdesks (see Annex 8 for a further discussion on SMEs/micro-enterprises).

It is possible that applications currently submitted through the decentralised and the mutual recognition procedures would shift to the centralised procedure, and overload the EMA. This concern was expressed by the regulators. It is difficult to estimate whether a significant shift would take place, as it would depend on the evaluation of veterinary pharmaceutical companies regarding what would the most appropriate marketing authorisation procedure for their products. This evaluation would be affected by many factors, for example the type of medicine, the way authorities would implement the marketing authorisation procedures and the fees linked to the procedure. To minimise a potentially excessive workload to the EMA and the CVMP from such shift, the handling of submissions for authorisation of well-established medicines such as generics (which require less expertise and assessment) could be fast-tracked. It is expected that the costs to the EMA of taking on new tasks (under this and other options) would be around 1-1,5 million euros per year, which could be covered by a new fee structure and efficiency measures, introduced by, for example, taking into account an increase in applications to the centralised procedure and an optimised use of systems already developed for human medicines.

This option would benefit human and animal health and the environment, as there would be a more consistent assessment across the Union of marketing authorisation applications. It would result in savings in administrative burdens of 5.6 million euros per year[54] to the pharmaceutical industry.

No additional resources would be required for the Commission for the management of marketing authorisations granted by centralised procedure as less resources would be required to manage variations of central marketing authorisations.

5.2.5. Option 10 - Simpler packaging and labelling

This policy option would reduce the costs of product authorisation to the pharmaceutical industry as the costs of language-specific packaging and labelling are high. There would be no significant impact on animal or human health or safety to the environment in terms of information provided on the safe and efficacious use of the product, as any risks associated with the reduction on the information provided in the packaging and labelling would be counterbalanced by placing the information on the product leaflet and by making the information available through other sources (e.g., through compendia, barcodes). The option also offers the possibility for Member States to allow the use of a non-official language on the packaging and labelling of the product if they so wish. The pre-approval of the packaging and labelling layout (but not the text) by the competent authorities would be abolished.

Having the packaging and labelling of a veterinary medicinal product prepared in fewer EU languages would reduce the administrative burden to the industry. It is difficult to quantify this potential benefit in terms of availability of medicines, but it is likely that some Member States considered to be small markets would be the most likely to benefit from this policy change. The relatively high number of products authorised in Belgium and Luxemburg shows the potential of this option. The risk that the package and labelling presented in a non-official language would not be understood by the end users, leading to a safety risk, would be mitigated by the authorities' assessment of the types of products that can be labelled with non-official languages (for example, restricting this to prescription only medicines as most veterinary surgeons can speak one of the major European languages) and the use of standardised abbreviations and symbols.

National authorities agreed with the industry that the reduction of the amount of text on outer packaging could be done without compromising the protection of animal and public health, but considered that no reductions should be made to the text within leaflets, which provide essential safety information.

5.2.6. Option 11 – Allow already nationally approved medicines to freely circulate across the Union

The estimated reduction in administrative burdens that this option would bring is 14.2 million euros per year as the administrative assessment would replace existing and relatively costly mechanisms for extending marketing authorisations to new national markets through mutual recognition[55]. The implementation of this option would also have a positive impact on the functioning of the internal market. Its effect on product availability is likely to be significant and positive, as the range of products available would increase: it is expected that pharmaceutical companies would be more inclined to place their products on smaller markets once the cost of obtaining a marketing authorisation is reduced.

Only medicines with a record of safe use would be extended across the EU, but in practice pharmacovigilance systems vary greatly between countries and may not be able to efficiently detect adverse reactions. Furthermore, a number of older products in some EU markets may have not been assessed for environmental safety in accordance with current standards[56]. Therefore, there is a risk that a purely administrative implementation of the option might have a negative impact on public and animal health, and the environment. To provide assurances regarding the safety of these medicines, it is possible to propose a system to harmonise the existing marketing authorisations to veterinary medicines through a risk-based review. This would allow the scientific assessment of those veterinary medicines that present, by their nature, a higher safety risk to the environment or to public or to animal health (for example, antimicrobials) whilst still allowing the granting of a harmonised marketing authorisation with the widest possible summary of product characteristics. Such review would lead to an increase in the administrative burden to the pharmaceutical industry, the EMA and the national authorities in the short term, but in the long term the administrative burdens would decrease due to the harmonisation of the authorisations. The collaboration between pharmaceutical companies to generate data through a monograph to cover missing data (such as environmental risks, for example) identified during the review, could be established to decrease the costs of the review to the industry.

In the interest of the availability of medicines for bees, and considering the nature of these products, it is proposed that any medicines authorised for honey bees in any Member State be administratively recognised across the EU.

5.3. Costs and benefits of options to review data requirements for marketing authorisation procedures 5.3.1. Option 12 - No new EU action

As this option would not imply any change to the provisions already existing in the legislation, costs and benefits are expected to stay identical.

5.3.2. Option 13 – Generic applications may refer to environmental data

The current legislation requires that an environmental risk assessment (ERA) is provided for each new application, including applications for generics. This requirement applies, even if it is logical that the ERA for the generic will reach the same conclusions and outcome as for the originator product. For certain old veterinary medicines on the market, no ERA has been carried out in accordance with the current ERA requirements and this is a potential problem, in particular if these products are used as originator for a new generic application. The CVMP expressed an opinion that the current legal provisions requiring an ERA for each new application for generics is considered not suitable to address the matter, as it leads to the duplication of the generation of data and possibly inconsistencies in conclusions. This committee suggested that a flexible approach could be set up, using a risk-based approach.

The option presented here aims to remove this inconsistency in the legislation, so that ERA will be considered in the same way as any other safety data, and no new ERA data would need to be provided for each generics application. Instead, a system of data sharing between applicants would be implemented so that a report (monograph) could be generated on active ingredients to address environmental risk concerns.

The main beneficiaries of this option would be the manufacturers of generic medicines, for whom the cost of obtaining a marketing authorisation would decrease. This in turn might lead to an increase in the number of generics placed on the market, increasing competition and thus driving down the prices of veterinary medicines (and therefore increasing animal holders’ access to medicines). It is expected that there would be no negative impact on the environment, as environmental data are already assessed as part of the safety dossier provided with the application for the reference product and companies would be able to join efforts to carry out supplementary or missing studies for particular ingredients, to cover any deficiencies detected. In addition, it is expected that the national competent authorities would elect to monitor these products more closely through pharmacovigilance. There is no significant impact on the functioning of the internal market.

5.3.3. Option 14 – Harmonisation of clinical trial procedures across the Union

This option aims to harmonise the procedures for authorisation of clinical trials for veterinary medicines. It is expected that it would bring a reduction of administrative burdens to the pharmaceutical industry and therefore it would potentially benefit the development of new medicines. This option would particularly benefit SMEs, which requested it.

5.4. Costs and benefits of options to simplify post authorisation procedures 5.4.1. Option 15 - No new EU action

As this option would not imply any change to the provisions already existing in the legislation, costs and benefits are expected to stay identical.

5.4.2. Option 16 – Risk-based pharmacovigilance

This option aims to introduce a risk-based approach for pharmacovigilance, by for example deleting the requirement of submission of periodic safety update reports (PSUR) for a product. At present the first PSUR is often due before the product has reached the

market, having scarce value for the evaluation of the safety of the product. The administrative burden of PSURs is high, while only very rarely the PSURs lead to safety findings. It is considered that the establishment of an electronic reporting system and signal detection are more effective means to monitor suspected adverse events, including environmental incidents and withdrawal period violations, and could ensure that prompt action is taken when needed.

The national authorities agreed that the simplication of pharmacovigilance requirements, in particular regarding PSURs, would allow them to concentrate efforts on areas and products of higher risk, rather than using up resources on routine work. However, the authorities also indicated that a robust pharmacovigilance system is key to protection of human and animal health.

The implementation of this option would bring savings to the pharmaceutical industry worth 47.2 million euros per year, and allow it to focus their resources towards other areas[57]. SMEs/micro-enterprises were specifically consulted on the impact of the pharmacovigilance requirements to their business and indicated that they would welcome a simplification of the current requirements.

5.4.3. Option 17 – Review of procedures to change a marketing authorisation (variations)

The introduction of a risk-based approach to deal with changes to a marketing authorisation could reduce administrative burdens to the pharmaceutical industry by 10.9 million euros per year[58]. This option proposes that only changes to the marketing authorisation with an assumed effect on safety of the product would be assessed and approved by the competent authorities. Other changes would be dealt with as notifications. The option would reduce costs and resources to the competent authorities, as there would be fewer variations to be processed and scientifically assessed. No particular effect on the internal market is expected.

5.4.4. Option 18 – Delete the obligation to market a product within 3 years of approval (Sunset clause)

The removal of the S