Proposal for a COUNCIL REGULATION (EC) ON FEES PAYABLE TO THE EUROPEAN MEDICINES EVALUATION AGENCY
Date: 1994-05-27
Institutions: European Commission
Subjects: European organisation, marketing standard, medicinal product, payment, pharmaceutical legislation, veterinary medicinal product

COMMISSION  OF THE EUROPEAN  COMMUNITIES 

C0M(94)  167  f i n al 
Brussels,  27.05.1994 

Proposal 

for  a 

COUNCIL  REGULATION  (EC) 

ON  FEES  PAYABLE  TO  THE  EUROPEAN  MEDICINES 
EVALUATION  AGENCY 

(presented  by  the  Commission) 

Explanatory  memorandum 

Pursuant to Council  Regulation  (EEC) No  2309/93  of 22 July  19931  laying  down  Community 
procedures for the authorisation and supervision of medicinal products for human and veterinary 
use  and  establishing  a  European  Agency  for  the  Evaluation  of  Medicinal  Products  ("the 
Agency"), the Council establishes the structure and the amount of fees paid by undertakings for 
obtaining and maintaining a Community marketing authorisation and for other services provided 
by the Agency. 

After  a start-up period  of  several  years, the Agency  should  be capable, as  far as  possible,  of 
financing  itself. Fees  will  then constitute the Agency's main source of  revenue. Therefore, the 
amount of fees should be fixed  in such a manner that the Agency's operational  capacity  is not 
weakened due to financial shortcomings. Fees will be payable to the Agency for the examination 
and the review of any application for authorisations for medicinal products. 

Furthermore, the Agency's  budget will  have to be in balance. The expenditure will  have to be 
met by the Agency's real income. 

In a general way, the fees to be levied by the Agency should neither lay an undue burden on the 
applicants nor endanger the  achievement  of  the Agency's primary task  of  providing  scientific 
advice  of  the  highest  possible  quality  in  relation  to  the  authorisation  and  supervision  of 
medicinal products. 

With regard to the amounts of the various  fees to be laid down, account must be taken of the 
international  character of the Agency  and its obligation to work under the  linguistic  regime of 
the Community and hence in nine different  languages. The corresponding additional expenditure 
is considerable and has not to be dealt with at national level. 

More  generally,  any  direct  comparison  of  the  structure  and the  amount  of  fees  between  the 
Agency  and  national  authorities  should  bear  in  mind,  among  others,  those  two  aspects  cited 
above, i.e. the Agency is set up as a supranational body under the law of the EC and it will have 
to be self-funding. 

The Agency's fee structure should be based on the principles of cost-effectiveness,  payment 
for services effectively  rendered and financial  independence and should enable the Agency 
to  live  up  to  the  high  scientific  and  organisational  standards  as  set  out  in  the  basic 
Regulation. 

Therefore, the standard fee for obtaining a Community marketing authorisation in the centralised 
procedure should be comparable to the benefit derived from a single procedure and authorisation 
throughout the Community. It should be more or less equivalent to but in no case substantially 
higher than the total of fees charged by the 12 Member States. 

OJL 214,24.08.1993, p.  1 

On the basis of the information made available, the fees levied by Member States' authorities for 
a marketing authorisation for a new medicinal product, as it would be subject to the centralised 
procedure  of  the  Regulation,  currently  total  nearly  220,000  ECU  for  human  medicines  and 
110,000 ECU for veterinary medicines. In view of the likely  increase of national  fees  until the 
end of 1994, a Community standard fee for obtaining a marketing authorisation in the centralised 
procedure set at 200,000 ECU for human and  100,000 ECU for veterinary medicines meets the 
above requirement. 

That would be even more so as the standard fee is defined as the initial comprehensive full  fee 
covering  all  specific  applications  for  the different  strengths,  schedules  of  dosage,  routes and 
forms  of  administration  which  are made simultaneously  for a given  medicinal  product  at the 
time  of  the  initial  application.  As  regards  veterinary  medicinal  products,  applications  for 
different  species and for the establishment of Maximum Residue Limits (hereinafter  referred to 
as MRLs) would equally be covered. 

By contrast, most Member States charge, on a separate basis, for different  specific  applications 
regarding the same medicinal  product, even if made simultaneously with the initial application, 
so that the actual sum of fees for a standard application is quite often  substantially higher than 
the one laid down for the issuing of a marketing authorisation. 

The  extra  work  generated  by  the  applicant's  right  to  appeal  against  an  opinion  adversely 
affecting  his rights would  equally  be comprised  in the standard fee  as  it cannot reasonably be 
detached from the initial application for a Community marketing authorisation. 

The comprehensive character of the fee should facilitate the collection of all necessary data 
at one time and, by that  means, streamline the authorisation  procedure and  make it  most 
cost-effectiveness. 

Correspondingly and to the same end, an extension fee is laid down for the additional work and 
expenditure of subsequent specific applications regarding the same medicinal  product whenever 
an applicant willingly chooses to do so. 

On the other hand, applications not sustained by a full dossier pursuant to Article 4 of Directive 
65/65/EEC  and  Article  5  of  Directive  81/851/EEC  respectively  require  less  work.  An  initial 
reduced fee duly takes into account this circumstance. 

For the  same  reasons,  an  application  for  a veterinary  medicinal  product  for  use  in  non-food 
producing animals where no MRL has to be established attracts the reduced fee. 

Applying the same principle of payment for service effectively  rendered, variations to the terms 
of  existing  authorisations  either  administrative  or  otherwise,  which  do  not  require  full 
assessment  of  the  product's  quality,  safety  and  efficacy  are  charged  according  to  their 
complexity  and  the  real  workload  linked  to  them  and  therefore  far  less  than  a  standard 
application. 

Two types of variations  have then to be distinguished.  The fee  for an administrative  variation 
type I can reasonably be set at 5,000 ECU whereas the one charged for all other variations type 
II is respectively 40,000 ECUfor human and 20,000 ECU for veterinary medicines. 

The  work  involved  in  the  mandatory  five  yearly  renewal  of  a  Community  marketing 
authorisation justifies a corresponding fee at the level of a fee for a variation. 

For the reasons stated above, fees for arbitrations under the decentralised procedure should also 
be fixed on the principle of service effectively  rendered by the Agency. The work involved can 
be assessed at more or less the same level as the one of a complex variation type II. 

The  arbitration  procedure  arises  from  differences  between  Member  states  about  the  mutual 
recognition  of  marketing  authorisations  and  is  hence  independent  of  the  applicant's  attitude. 
Therefore, the levying of an arbitration fee by the Agency must be compensated by a reduction 
by one half of national  fees of all  Member States other than the first  where an application has 
been successfully lodged. 

As regards inspections made successively  to a marketing authorisation  at the request or in the 
interest of its holder, a fee set at 10,000 ECU on a flat-rate basis is justified. It corresponds to the 
above principles of service effectively  rendered and cost-effectiveness. 

The nature of the assessment of a veterinary medicinal product as well as the size of the market 
involved  are substantially  different  from  those  of  a medicinal  product  for  human  use  and do 
therefore justify a general reduction of the fee; furthermore, it should be possible to take account 
of the particular situation linked to the marketing of certain veterinary medicinal products on an 
individual basis and this aim could be best achieved  under the special  provision of a clause for 
reductions and waivers. 

As regards the evaluation of applications for MRLs, it is up to the applicant to decide whether to 
apply separately for the establishment  of MRLs or to do so together with  an application  for a 
Community  marketing  authorisation  in  which  case  the  fee  incurred  for  the  evaluation  of  the 
application for authorisation covers the one for the establishment of MRLs. 

If however the applicant deliberately chooses to apply separately for the establishment of MRLs, 
the additional work and expenditure should be recouped by means of an Isolated-MRL-fee. 

As regards all  other fees  for the  assessment  of  veterinary  medicinal  products, the reasons  for 
levying them or to abstain from it remain identical to those stated above. 

Under exceptional  circumstances as for example  in the case of medicinal  products designed to 
treat only a  limited  number of  patients  of  a particular disease  (so-called  orphan  drugs), small 
sized businesses or for essential public health reasons, there should be provisions for waivers or 
reductions of the fees stated above. However, such cases should be decided only on the merits of 
each individual case by the management board on a proposal from the Director after hearing the 
competent Committee. 

The same procedure should  apply to the  settling  of  disagreements  which  may arise  about the 
classification of an application under one of the above fee items. 

PROPOSAL FOR A COUNCIL REGULATION ON FEES PAYABLE TO THE 

EUROPEAN MEDICINES EVALUATION AGENCY 

THE COUNCIL OF THE EUROPEAN UNION 

Having regard to the Treaty establishing the European Community, 

Having  regard  to  Council  Regulation  (EEC)  No  2309/93  of  22  July  1993  laying  down 
Community procedures for the authorisation and supervision of medicinal  products for human 
and veterinary use and establishing a European Agency for the Evaluation of Medicinal Products 
("the Agency"), and in particular Article 58 thereof, 

Having regard to the proposal from the Commission2, 

Whereas Article  58  of  the  Regulation  requires  the  Council  to  establish  the  structure  and the 
amount of fees referred to in Article 57(1); 

Whereas Article 57(1 )of the Regulation establishes that the revenues of the Agency shall consist 
of  a  contribution  of  the  Community,  and  the  fees  paid  by  undertakings  for  obtaining  and 
maintaining  a  Community  marketing  authorisation  and  for  other  services  provided  by  the 
Agency; 

Whereas  Article  6(3)  and  28(3)  of  the  Regulation  respectively  require  an  application  for 
authorisation for a medicinal  product be accompanied by the fee payable to the Agency  for the 
examination of the application; 

Whereas  the  standard  fee  should  be  defined  as  the  comprehensive  full  fee  covering  all 
applications for the different  strengths, schedules of dosage, routes and forms of administration 
which are made simultaneously  for a given medicinal  product in the  initial  request  in order to 
facilitate  the  collection  of  all  necessary  data  at one  time  and,  by  that  means,  streamline  the 
authorisation procedure and make it most cost-effective; 

Whereas to the  same  end,  an  extension  fee  should  be  laid  down  for  subsequent  applications 
regarding a medicinal product which has already been authorised in order to take account of the 
additional work and expenditure where an applicant chooses to submit the applications gradually 
and subsequently; 

2OJC 

Whereas it should be provided for a reduced fee for applications not required to be sustained by 
a  full  dossier  pursuant  to  Article  4  of  Directive  65/65/EEC  and  Article  5  of  Directive 
81/851/EEC respectively  and  for applications  concerning  a medicinal  product  for  use  in non 
food producing animals; 

Whereas variations,  either  administrative  or other, to  the terms  of  existing  authorisations  not 
requiring  full  assessment  of  the  product's  quality,  safety  and  efficacy  should  be  charged 
according to their complexity and the real workload linked to them and therefore far less than a 
standard application; 

Whereas the work  involved  in the  mandatory five  yearly  renewal  of  a Community  marketing 
authorisation justifies a corresponding fee at the level of a fee for a complex variation; 

Whereas fees for arbitrations under the decentralised procedure should be fixed  on the principle 
of service effectively  rendered by the Agency; whereas that work can be assessed at more or less 
the  same  level  as  that  involved  in  a  variation  requiring  a  complex  evaluation;  whereas 
furthermore the arbitration procedure arises from differences  between Member States about the 
mutual  recognition  of  marketing  authorisations  and  is  hence  independent  of  the  applicant's 
attitude;  whereas,  therefore,  the  levying  of  an  arbitration  fee  by  the  Agency  should  be 
compensated by a reduction by one half of national fees of all Member States other than the first 
one where an application has been successfully lodged; 

Whereas on the same grounds of service effectively  rendered a fee should be levied on a flat-rate 
basis for any inspection made successively to a marketing authorisation  at the request or in the 
interest of its holder; 

Whereas the nature of the assessment of a veterinary medicinal product as well as the size of the 
market involved are substantially different from those of a medicinal product for human use and 
do therefore justify  a general reduction of the fee; whereas it should furthermore be possible to 
take account of the particular situation  linked to the marketing of certain  veterinary  medicinal 
products  on  an  individual  basis;  whereas  this  aim  can  be  best  achieved  under  the  special 
provisions of a clause for reductions and waivers; 

Whereas as regards the evaluation of applications for MRLs it is up to the applicant to decide 
whether  to  apply  separately  for  the  establishment  of  MRLs  or  to  do  so  together  with  his 
application  for  a  Community  marketing  authorisation  in  which  case  the  fee  incurred  for  the 
evaluation  of  the  application  for  authorisation  should  cover  the  one  for  the  establishment  of 
MRLs;  whereas,  however,  the  applicant  deliberately  chooses  to  apply  separately  for  the 
establishment of MRLs, the additional work and expenditure should be recouped by means of an 
lsolated-MRL-fee; 

Whereas,  as  regards  all  other  fees  for  the  assessment  of  veterinary  medicinal  products,  the 
reasons for levying them or to abstain from it remain identical to those stated above; 

Whereas  it  should  be  provided  for  waivers  or  reductions  of  the  fees  stated  above  under 
exceptional  circumstances as  for example  in the case  of  medicinal  products designed  to treat 
only a limited number of patients of a particular disease (so-called  orphan drugs), small  sized 
businesses or for essential public health reasons; whereas it should be decided upon those cases 
only on the merits of each individual case by the management board; whereas to that effect,  a 
proposai from the Director has to be made after hearing the competent Committee; 

HAS ADOfTED THIS REGULATION: 

(1) Feet for obtaining and maintaining a Community marketing authorisation shall be levied in 
accordance with this regulation. 

Scope 

(2) They shall be laid down in ECU. 

Applications for medicinal products for human use under the  centralised procedure 

Ariicje_2 

<" Full fee 

; 

2QQJm 

It is the comprehensive standard fee for an application for a Community marketing authorisation 
of  a  given  medicinal  product  sustained  by  a  full  dossier.  It  covers  all  applications  for  the 
different  strengths,  schedules  of  dosage,  routes  and  forms  of  administration  which  are  made 
simultaneously for that medicinal product at  the  time of the initial application. 

(2) Reduced fee 

: 

10Q.QQQ 

It  is the  reduced  fee  for an application  for  a  Community  marketing  authorisation  of  a  given 
medicinal  product  not  required  to  be  sustained  by  a  full  dossier  as  provided  for  under  the 
exception  rules of point 8 (a) of the second paragraph of Article 4  of  Directive  65/65/EEC. It 
covers  all  applications  for  the  different  strengths,  schedules  of  dosage,  routes  and  forms  of 
administration  which  are  made  simultaneously  for  that medicinal  product  at  the  time  of  the 
initial application. 

(3) Extension fee 

, 

! 

4Q.0QQ 

It is the fee for each supplement or extension of an existing Community marketing authorisation 
of  a given  medicinal  product to different  strengths, schedules of  dosage,  routes and  forms  of 
administration. It applies where an applicant chooses to submit the applications gradually and 
subsequently to take account of the additional work and  expenditure hereby caused. 

( 4 ^Variation fee type I 

5.000 

It is the fee  for an administrative or minor change to an existing marketing authorisation which 
would  be  proposed  by  the  marketing  authorisation  holder  and  would  neither  change  the 
specifications  for  the  active  ingrédients),  the  release  specifications  or  end  of  shelf-life-
specifications  as  already  authorised  nor  alter  the  summary  of  product  characteristics  or  the 
labelling of the medicinal product. 

fSWariationfeetvpell 

4Q.0QQ 

It  is  the  fee  for  all  other  changes  proposed  by  the  marketing  authorisation  holder  to  the 
particulars  referred  to  in  article  4  of  Directive  65/65/EEC  of  an  existing  authorisation  not 
requiring a new application. 

(6\ Five vearlv renewal fee 

4Q.00Q 

It is the fee due for the obligatory five yearly renewal of a Community marketing authorisation 
after a review of the available new information about the product. 

m  Inspection fee 

10,000 

It is the flat-rate fee for any inspection within the European Communities made at the request or 
in the interest of  the  holder of a marketing authorisation. For inspections outside the European 
Communities travel expenses will be charged extra on the basis of the effective cost. 

Applications for medicinal products for human use under the decentralised procedure 

Article 3 

Arbitration fee 
It is the  flat  rate fee  for  the  work  of the Agency  involved  in the  arbitration  of  disagreements 
between Member States on the mutual  recognition  of  a  national  marketing authorisation  in the 
decentralised procedure. 

40.000 

Member States  fees  for delivering  a national  marketing authorisation  are reduced  by one  half 
except  for  the  first  Member  State  that  issued  a  marketing  authorisation  for  that  medicinal 
product. 

Applications for medicinal products for veterinary use under the centralised procedure 

Article 4 

(1) Full fee 

. 

100,000 

It is the comprehensive standard fee for an  application for a Community marketing authorisation 
of  a  given  medicinal  product for use  in food  producing animals sustained by a full  dossier. It 
covers all applications for the different  species, strengths, schedules of dosage, routes and forms 
of administration and for the establishment of  an  MRL which are made simultaneously  for that 
medicinal product at the time of the initial application. 

m  Reduced fee 

SiLÛÛQ 

It  is  the* reduced  fee  for  an  application  for  a Community  marketing  authorisation  of  a  given 
médicinal  product  not  required  to  be  sustained  by  a  full  dossier  as  provided  for  under  the 
exception rules of point  10 (a) of the second paragraph of Article 5 of Directive 81/851 /EEC or 
for an application  concerning  a  medicinal  product  for  use  in  non-food  producing  animals.  It 
covers all applications for the different species, strengths, schedules of dosage, routes and forms 
of administration  which are made simultaneously for that medicinal  product at the time of the 
initial application. 

(3) Isolated MRL fee 

$0.000 

It is the fee for an  isolated establishment of an MRL  for a new medicinal product 

(4) Extension fee 
It is the fee for each supplement or extension of an existing Community marketing authorisation 
of  a  given  medicinal  product  to  different  species,  strengths, schedules  of  dosage,  routes and 
forms  of  administration.  It  applies  where  an  applicant  chooses  to  submit  the  applications 
gradually  and  subsequently  to  take  account  of  the  additional  work  and  expenditure  hereby 
caused. 

2SLSW. 

(5) Variation fee type I 

S.QQQ 

It is the fee for an administrative or minor change to an existing marketing authorisation which 
would  be  proposed  by  the  marketing  authorisation  holder  and  would  neither  change  the 
specifications  for  the  active  ingredients),  the  release  specifications  or  end  of  shelf-life-
speciflcations  as  already  authorised  nor  alter  the  summary  of  product  characteristics  or  the 
labelling of the medicinal product. 

<€) Variation fee type 11 

20.000 

It  is  the  fee  for  all  other  changes  proposed  by  the  marketing  authorisation  holder  to  the 
particulars  referred  to  in  Article  5  of  Directive  81/851 /EEC  of  an  existing  authorisation  not 
requiring a new application. 

m  Five vearlv renewal fee 

^ 

2ÛJIQÛ 

It is the fee due for the obligatory five yearly renewal of a Community marketing authorisation 
after a review of the available new information about the product. 

(8) Inspection fee 

lo.ooo 

It is the flat-rate fee for any inspection within the European Communities made at the request or 
in the interest of the  holder of a marketing authorisation. For inspections outside the European 
Communities travel expenses will be charged extra on the basis of the effective cost 

10 

Applications for medicinal products for veterinary use under the decentralised procedure 

Article 5 

Arbitration fee 

: 

2ÛJ3ÛÛ 

It is the flat  rate fee  for the work  of  the Agency  involved  in the arbitration  of  disagreements 
between Member States on the mutual recognition of a  national marketing authorisation  in the 
decentralised procedure. 

Member States fees  for delivering a national  marketing authorisation  are reduced  by one  half 
except  for  the  first  Member  State  that  issued  a  marketing  authorisation  for  that  medicinal 
product. 

Atiicje_£ 

Waivers, fee reductions and dispute settlement 

(1) Under exceptional  circumstances as for example in the case of medicinal products designed 
to treat only a limited number of patients of a particular disease (so-called orphan drugs), small 
sized businesses or for essential  public health reasons, the management board may decide upon 
waivers and fee reductions on the merits of each individual case on a proposal from the Director 
who will have consulted the competent Committee. 

(2) The same procedure shall apply to any disagreement which may arise about the classification 
of an application under one of the above fee items. 

Article 7 

Due date and belated payment 

(1) Fees in respect of which the due date is not specified  in mis Regulation or Regulation (EEC) 
No 2309/93 of 22 July  1993 shall be due on the date of receipt of the application for the service 
for which the fee is incurred. 

(2) Where any fee payable under this Regulation remains unpaid at its due date the Director may 
decide  not  to  make  or  to  suspend  services  dependent  upon  the  advance  payment  of  the 
corresponding fee. 

Arlkle_& 

Implementing rules 

(1) Without prejudice to other provisions of this Regulation or Regulation (EEC) No 2309/93  of 
22 July  1993, implementing  rules to be adopted by the Agency's management  board shall  lay 
down  the  due  date  for  fees  to  be  paid  under  Article  1,  the  methods  of  their  payment,  the 
consequences of belated or omitted payment and contain all other provisions needed to put the 
present regulation into effect. 

11 

(2) The  same  rules shall  determine the conversion  rates in national  currencies of the  fees  and 
costs to be levied under this Regulation and laid down pursuant to Article 1(2) in ECU. 

Article 9 

Conversion of procedures 

Fonner concertation procedures converted on 1 January 1995 to centralised procedures pursuant 
to Article 2 of Directive 93/41/EEC attract the arbitration fee as laid down in Articles 3 and 5. 

Article 10 

Entry into force and legal effect 

(1) This  Regulation  shall  enter  into force on the day  following  its  publication  in the  Official 
Journal of the European Communities. 

(2) It shall be binding in its entirety and directly applicable in all Member States. 

Done at Brussels, 

12 

EUROPEAN AGENCY FOR THE EVALUATION OF MEDICINAL PRODUCTS 

PROPOSAL FOR A COUNCIL REGULATION 
ON THE FEES PAYABLE BY UNDERTAKINGS 

FINANCIAL STATEMENT 

\ 

ARTICLE  B5-306:  Subsidy  for  the  European  Agency  for  the  Evaluation  of  Medicinal 
Products 

13 

authorized appropirations 
1994 

appropriations requested 
1995 

variation % 

commitments 

payments 

commitments 

payments 

commitments 

payments 

1 

2 

3 

4 

7.500.000 

6.800.000 

9.500.000* 

9.500.000* 

5 = 3/1 

37,8% 

6 = 4/2 

52% 

•APB95 

1. Title 

Proposal for a Council implementing regulation on the fees paid by undertakings for obtaining 
and maintaining a Community marketing authorization and for other services provided by the 
Agency. 

2. Budget headings 

See above. 

3. Legal basis 

Articles 57 and 58 of Regulation (EEC) No 2309/93 of 22 July 1993. 

4. Description of the action 

4.1 General objective 

Completion of the internal market in the pharmaceuticals sector (medicinal products for human 
and  veterinary  use);  improved  public  health  and  consumer  protection  throughout  the 
Community. 

4 J2 Specific objectives 

Council  Regulation  (EEC) No  2309/93, adopted  on  22  July  1993, lays  down  (centralized) 
Community procedures for the authorization and supervision of medicinal products for human 
and veterinary use and establishes a European Agency for the Evaluation of Medicinal Products. 
Three Council Directives (93/39/EEC, 93/40/EEC and 93/41/EEC), adopted on  14 June 1993, 
complete the system for the future authorization of medicinal products under the decentralized 
procedure. 

1 

Including a reserve fund of 700 000 ecus 

14 

The  abovementioned  Regulation  entered  into force  on the  day following  the  decision  taken  by 
the Heads of State and Government on 29 October  1993 establishing, inter alia, the headquarters 
of the Agency in London. 

As of now, the Agency officially  exists and is due to become operational from  1  January 1995. 

The future  system will entail: 

a)  the  creation  of  a  centralized  Community  authorization 

issued  by  the  Commission 
(compulsory  in the case of  biotechnology  products  and  veterinary  medicinal  products  used 
as performance  enhancers, optional in the case of other innovatory medicinal products); 

b)  the creation  of a new decentralized  procedure, based  on the principle  of mutual  recognition 
which  will  enable  a  marketing  authorization  from  one  Member  State  to  be  extended 
gradually to the others; in the event of disputes between  Member  States, the Agency will  be 
asked to arbitrate, and its decision will be made binding by the Commission; 

c) 

the introduction of consolidated Community procedures for the collection and assessment of 
information  about  adverse  reactions  to  medicinal  products  and  for  the  adoption  by  the 
Community of appropriate regulatory measures (pharmacovigilance); 

d)  the  delivery  by  the  Commission  of  a  scientific  opinion  on  the  maximum  veterinary 
medicinal product residue levels that can be permitted in foodstuffs  of animal origin without 
entailing risks for the consumer. 

Under Articles 57 and 58 of the basic Regulation, the system will be financed from  the Agency's 
own  revenues  which  shall  consist  of  a contribution  from  the  Community  and  the  fees  paid  by 
undertakings  for  obtaining and maintaining a Community  marketing authorization  and  for  other 
services provided by the Agency. 

The  purpose  of  this  implementing  Regulation  is  to  establish  a  structural  framework  for 
fixing the levels of the fees referred to above. 

43  Duration 

Selectively targeted measures 

4.4 Sectors of the population targeted by the action 

a)  Approximately 2 000 European pharmaceuticals firms applying for authorization 

b)  Approximately  3 000  national  officials  required  to  work  together  through  t 

interface 

c)  Significant  proportion of the European population (sick persons) 

15 

5. Classification of the expenditure 

NCE,DC 

6. Type of expenditure 

Full direct subsidy in 1994,  partial subsidy from 1995. 

a)  Initial contribution MOMtt from the Community budget in  1994 

In  order  to  launch  the  Agency's activities, it  will  be necessary  to  make provision  for  a 
relatively  high  level  of  start-up  investment  which  will  have  to  be  funded  from  the 
Community budget, since the Agency will not yet be in a position to provide services to the 
undertakings. 

b)  Partial subsidy from 1995. 

From 1995 the Agency will be required to examine applications for authorization submitted 
by  pharmaceuticals  companies  on  a  fee-paying  basis,  thus  generating  revenue  for  the 
Agency's budget. 

Thus, a contribution from the Community budget is required (albeit on a decreasing scale up to 
1998) in respect of the following: 

- as a balancing subsidy for the Agency's operating budget throughout the period during which 
proceeds from fees do not constitute a stable source of revenue capable of coping with major 
investment and start-up costs, i.e., until 1998; 

- to cover the considerable amount of investment required for the telecommunications network 
to  be 
and  warnings  between 
information 
Commission/Agency/competent authorities in the Member States. 

exchange  of 

installed 

the 

for 

7. Financial impact on  the  operating appropriations 

7.1.  Method of calculating the total cost of the action 

On the basis of the study carried out by  the  DRT  consultants, but subject to a reassessment of the 
foreseeable work load (reduced number of dossiers), investment and operating costs for the next 
five years are as follows: 

16 

Costs in thousands ECU 

1995 

1996 

1997 

1998 

1999 

Investment 

operating expenditure 

Rapporteurs+experts 

964 

704 

-

-

_ 

3.456 

4.154 

4.623 

4.761 

4.904 

5.979 

12.393 

15.510 

22.420 

24.307 

Administrative costs + staff 

12.481 

16.541 

18.446 

27.257 

30.610 

Translation Center in Luxembourg 

3.000 

5.000 

5.800 

8.200 

9.000 

Total "Agency" 

25.880 

38.792 

44.379 

62.638 

68.821 

12  Itemized  breakdown 

VENTILATION 

BUDGET 94 

APB95 

VARIATION EN % 

Investment 

operating expenditure 

Administrative and staff 

costs 

payments rapp./experts 

Translation Center 

3.105 

1.756 

2.639 

964 

- 69 % 

3.456 

+ 97 % 

12.481 

+ 373% 

5.979 

3.000 

TOTAL 

7.500 

25.880 

+ 245% 

As  far  as  the  variation  in  rates  is  concerned,  it  should  be  noted  that  the  1994  financial  year 
relates  to  the  launching  of  the  Agency,  whereas  the  1995  financial  year  (the  year  when  the 
Agency becomes operational) represents the Agency's first genuine operating budget. 

7.3 Provisional schedule of commitment appropriations 

Not applicable, since this is a subsidy. 

7.4 Subsidy under Heading B5-306 "Agency for the Evaluation of Medicinal Products" 

Since this is an autonomous body endowed with legal personality and possessing its own budget, 
the contribution from the Community budget will take the form  of a subsidy to be entered under 
Heading B5-306.  The amount of this  subsidy  is estimated  on the basis of the costs referred  to 
above and the fees expected to accrue from 1995 and beyond. 

The  "low" hypothesis  recommended  by the competent  Commission  departments  would  aim  to 
achieve self-sufficiency  towards 1998. 

17 

The  "high" hypothesis would  allow corrections to be made  in the event  of overestimates  of the 
number  of applications, and hence of the principal  sources of revenue, and would  provide  flat-
rate  funding  (25%)  from  the  Community  budget  to  cover  general  market-monitoring  tasks 
incumbent on the authority responsible for taking decisions, i.e., the Commission. 

a^ "Low" budget estimate, aimed at achieving self-sufficiency  based on fees 

Under  this  hypothesis, preferable  from  the  point  of view  of  budgetary  discipline,  the  Heading 
B5-306 subsidy would enable self-sufficiency  to be achieved in 1998: 

Thousands ECU 

Agency costs 

1995 

1996 

1997 

1998 

1999 

25.880 

38.792 

44.379 

62.638 

68.821 

(15 % Translation Center included) 

(3.000) 

(5.000) 

(5.800) 

(8.200) 

(9.000) 

Fees 

% cover 

Subs.B 5-306 

12.545 

22.347 

28.284 

-

-

49% 

9.500* 

58% 
** 

64% 
** 

100% 
** 

100% 
** 

* amount previewed  by the Commission  related to the availability of ressources in the financial 
perspectives.  A  consensus  at  the  budgetary  authority  level  should  allow  to  make  up  the 
difference  between the high fee and the low fee hypothesis 

**  Community  subsidy  to  be  determined  every  year  taking  into  account  the  availability  of 
budgetary ressources in the frame of financial perspectives 

Revenue trends 

This  Regulation  lays  down  the  structure  and  exact  amounts  of  the  revenue  expected  from  the 
pharmaceuticals industry. 

The fees are fixed in such a way as not to exceed the total amount of corresponding national  fees 
required in order to obtain a marketing authorization in the 12 Member States. 

Nevertheless,  these  fees  are  high  and  could  not  be  increased  at  present  without  placing  an 
excessive burden on the economic resources of the undertakings oncerned.  Revenue trends as a 
function of fees are indicated in the following table: 

Human 

Veterinary 

TOTAL 

1995 

1996 

1997 

from 

1998 

10.575.000 

17.273.100 

21.907.660 

1.970.000 

5.073.900 

6.376.037 

12.545.000 

22.347.000 

28.283.697  probably 

self-sufficient 

18 

b) "High" budget estimate, maintaining Community  co-financing 

Given  that  the total  costs  and  the  monitoring  of the  market  would  account  for  approximately  a 
quarter  of  the  activities,  this  proportion  would  continue  to  be  chargeable  to  the  Community 
budget  if the "high" hypothesis of co-financing  from  the Community  budget were to be adopted. 
Such  a  hypothesis  would  also  facilitate  adjustments  as  a  function  of  the  actual  amount  of  the 
revenue  obtained  in the  first  few  years  after  the  new  system  became  operational.  On  the  other 
hand, the level of fees  forming the basis of this proposal  for a Regulation  would  not be  sufficient 
in  1995, 1996 and  1997 to achieve the envisaged rate of cover of 75%. 

Thousands ECU 

Agency costs 

1995 

1996 

1997 

1998 

1999 

25.880 

38.792 

44.379 

62.638 

(15 % Translation  Center  included) 

(3.000) 

(5.000) 

(5.800) 

(8.200) 

Subs.B 5-306 

9.500 

** 

** 

** 

68.821 

(9.000) 
** 

Level of fees to be reached 

16.380 

27.155 

32.396 

46.979 

51.616 

% cover 

63% 

70% 

73% 

75% 

75% 

**  Community  subsidy  to  be  determined  every  year  taking  into  account  the  availability  of 
budgetary ressources in the frame  of financial  perspectives 

8. Anti-fraud  measures 

Council  Regulation  (EEC) No 2309/93 of 22 July  1993 setting up the Agency  for the  Evaluation 
of  Medicinal  Products  provides  for  specific  adoption  and  budgetary  control  procedures.  Each 
year the Management  Board, made up of representatives  of the Member  States, the Commission 
and  the  European  Parliament,  shall  be  responsible  for  adopting  the  draft  budget  (Article  55). 
The budgetary control mechanisms are described  in Article 57. 

9. Aspects of cost-effectiveness  analysis 

9.1 Objectives 

The provisions on the future  system  for the authorization  of medicinal  products  seek to  promote 
the  free  movement  of  medicinal  products  in the  Community,  while  at  the  same  time  providing 
better public health  protection.  In particular, they will  permit  rapid  access to the new  medicinal 
products  available  on  the  single  market  and  ensure  greater  harmonization  of  the  conditions 
governing  the  placing  on  the  market  of  commercial  medicinal  products.  A  single  evaluation, 
meeting the highest possible scientific  standards, will be carried out by the European  Agency  for 
the  Evaluation  of  Medicinal  Products,  working  in  partnership  with  the  Member  States  and  the 
Commission. 

19 

Consequently, these provisions come under three major Community strategies: 

completion of the internal market in the pharmaceuticals sector; 

industrial policy to promote the competitiveness of European companies; 

creation  of  a  trans-European  communications  and  early  warning  network  linking  the 
competent authorities, the Agency and the Commission. 

- 

- 

9.2 Justification for the action 

The pharmaceuticals  market  is characterized  by  a set  of  highly  complex  technical  regulations 
designed  to  protect  public  health  and  the  interests  of  social  security  beneficiaries  and, 
sometimes,  to  promote  the  national  industry.  The  pharmaceuticals  industry  still  occupies  a 
position as one of the leading producers and exporters of pharmaceuticals worldwide.  However, 
the  European  market  remains  fragmented  by  virtue  of  the  existence  of  national  marketing 
authorizations, resulting in the undermining of the competitiveness of this industry vis-à-vis the 
American and Japanese industries, notably in the field of advanced research. 

It does not appear feasible  - or, for that matter, desirable - to dismantle the national  structures, 
only to build  in their place a gigantic European Food and Drug Administration  (FDA) along US 
It  should  be  noted,  however,  that  a  total  of  nearly  3 000  staff  are  engaged  in  drug 
lines. 
regulatory activities  in the Twelve Member States, i.e., as many as in the US-FDA.  In order to 
avoid  unnecessary  duplication  of  work  involving  12 separate  evaluations,  thus  leading  to  the 
wasteful  use of resources and the creation of possible sources of conflict, it would be far better to 
share the work among the authorities concerned  by introducing not only the guarantees that  are 
essential  for  public  health  but  also  sensible  emulation  procedures  to  be  followed  by  all  the 
competent authorities.  To this end, considerable efforts  are needed to strengthen  the evaluation 
capabilities  and  authority  of  the  European  committees,  so  as  to  ensure  that  the  opinions  they 
deliver can form the basis for solutions that are accepted throughout the Community. 

The Community authorization  system, as adopted by the Council, will reduce the time taken  to 
examine  the  dossiers  to  less  than  300  days.  The activities  of  the  national  authorities  will  be 
combined  into  a  single  European  system  leaving  wide  scope  for  decentralized  evaluation, 
inspection  and  control  activities, while  at the same time providing  for  centralized  coordination 
for  a  small  number  of  new  medicinal  products  and  for  arbitration  in  the  event  of  possible 
conflicts  involving national decisions. 

In  addition,  the  workload  and  the  estimated  costs  resulting  from  the  texts  approved  by  the 
Council have been the subject  of a major  study carried out on behalf of the Commission  by the 
firms  Deloitte, Touche  Ross and  Besselaar (DRT) following  a call for  tenders.  This study  was 
carried  out from January to December  1992 in close collaboration  with  the competent  national 
authorities and the manufacturers  concerned. 

At the same time, it must  be stressed  that, for the pharmaceuticals  industry, speed  of access  to 
the  mass  market  and  simplification  of the  authorization  procedures  (one  evaluation  instead  of 
twelve) are crucial  factors  in ensuring competitiveness  vis-à-vis manufacturers  in the USA  and 
Japan.  Furthermore, a single European evaluation meeting high scientific  standards will provide 
this industry with an important trump card as far as exports are concerned. 

20 

Research  and  development  costs  for  a  new  medicinal  product  are  generally  estimated  at  more 
than 200 million ecus.  Consequently, the amount in authorization  fees, forming  the basis for the 
financing  of  the  Agency,.appears  perfectly  modest  and  reasonable:  200 000  ecus  for  a  new 
medicinal product, i.e., 0.001% of the total cost of the research.  In addition, this Community  fee 
cancels and replaces an equivalent amount in fees which the firms  are currently  required  to pay 
to the national authorities. 

The  new  system  of  authorization  will  also  reduce  the  overall  workload  of  the  Member  States 
which  in future  will  be required, through  the Agency, to share out the evaluation  tasks  hitherto 
repeated  twelve  times.  At  present,  the  cumulative  operating  budget  of  the  12  competent 
authorities  already  exceeds  the  250 million  ecu  figure  (with  the  clear  likelihood  of  further 
increases) as against the cost of the Agency (27 million in 1995,52 million in 1999). 

Looking ahead  to  1999, the  introduction- of the new system  will  be accompanied,  according  to 
the DRT report, by a reduction of at least 40% in the overall volume of business. 

The  cost-benefit  ratio  of  the  European  Agency  as  compared  with  the  continuation  of  twelve 
national  evaluation  systems  operating  along  repetitive  and  independent  lines  has  already  been 
demonstrated.  This multiplier effect  will bring benefits not only to the relevant national  budgets 
but also to the European pharmaceuticals firms themselves. 

The creation  of a  European  Agency  with  a  budget  of  its own, funded  to a  large extent  by  fees 
from the industry for services rendered, clearly opens up the possibility of mobilizing alternative 
sources of  funding. 

In  the  event  of  the  Agency  not  being  set  up,  the  Commission  would  have  to  assume  direct 
responsibility for the management of numerous meetings of experts on the Community budget in 
order to ensure the  necessary  degree  of  scientific  cooperation  required  by the  single  market  in 
pharmaceuticals. 

93  Monitoring and assessment of the action 

Selected performance  indicators: 

The  parameters  for  judging  the  efficiency  of  the  future  system  of  authorization  and  of  the 
Agency itself fall under two main categories: 

a)  Actual  number  of  applications  submitted  by  the  companies  under  the  centralized  or 
decentralized  procedure,  taking  account  of  the  choices  left  open  to  the  undertakings  and  the 
largely optional character of the decentralized system up to 1998. 

21 

The DRTs forecasts for applications, revised downwards by the Commission, are as follows: 

1995 

1996 

1997 

1998 

1999 

Centralized  applications 

(no change) 

Human 

Veterinary 

Decentralized  arbitration 

Human 

Veterinary 

Establishment of limits 

for veterinary residues 

30 

5 

60 

20 

10 

32 

10 

100 

54 

34 

16 

100 

64 

36 

14 

500 

144 

38 

12 

480 

120 

10 

20 

15 

15 

b) Compliance with the 300-day evaluation and decision-making deadline, as laid down by the 
Agency  and  the  Commission.  The  speed  of  the new  system,  compared  with  certain  national 
deadlines (4-6 years in Germany), is a crucial factor for the European industry. 

Evaluation procedures and frequency: 

The  Regulation  provides  for  the  adoption  by  the  Agency's  Management  Board  of  an annual 
report on the activities of the Agency to be forwarded to the Member States, the Commission, 
the Council and the European Parliament (Article 56).  In particular, the Executive  Director of 
the Agency will be responsible for reporting on compliance with the evaluation deadlines and on 
the number of different applications examined by the Agency (Article 55). 

Within six years of the entry into force of the Regulation, the Commission shall publish a full 
general report on the experience acquired under the new system, indicating, where appropriate, 
any corrective measures that need to be introduced (Article 71). 

22 

IMPACT ASSESSMENT FORM 

THE IMPACT OF THE PROPOSAL OF BUSINESS 

with special reference to small and medium sized enterprises (SMEs) 

Title of proposal : Proposal for a Council Regulation on fees payable to the EMEA 

The proposal : 

1.  In  order  to  promote  the  free  circulation  of  medicinal  products  throughout  the  Community, 
while  reinforcing  the  protection  of  public  health,  the  Council  adopted  on  14 June  1993  three 
Directives  93/39/EEC,  93/40/EEC  and  93/41/EEC  and  on  22  July  1993  Regulation  (EEC)  n° 
2309/93, hereinafter  referred to as the Basic Regulation. 

(OJ n° L214 of 24.08.93). 

The  Basic  Regulation  provides  for  a  new  centralised  Community  authorisation  procedure  for 
technologically  advanced  medicinal  products  leading  to  a  single  Community  marketing 
authorisation  valid  in all  Member  States.  Furthermore,  it sets up the  European  Agency  for  the 
Evaluation  of  Medicinal  Products  to  which  applications  both  under  the  centralised  and 
decentralised procedures will have to be submitted. 

The Basic Regulation  came into force on 30.10.93, the day following  the decision of the Heads 
of States and Governments to choose London as the Headquarters of the EMEA. 

The present proposal is an implementing Council Regulation pursuant to Art. 57 (1) and  58 
of Council Regulation  (EEC) n° 2309/93 which read as follows : 

Art. 57 (1) : "The revenues of the Agency shall consist of à contribution from the Community, 
and  the  fees  paid  by  undertakings  for  obtaining  and  maintaining  a  Community  marketing 
authorisation and for other services provided by the Agency." 

Art  58  :  "The  structure  and  the  amount  of  the  fees  referred  to  in  Article  57  (1)  shall  be 
established by the Council acting under the conditions provided for  by the Treaty on a proposal 
from the Commission,  following  consultation  of organizations  representing the  interests  of  the 
pharmaceutical industry at Community level." 

The impact on business 

23 

2. Who will be affected by the proposal ? 

About  2000  operators  of  the  European  pharmaceutical  industry  applying  for  marketing 
authorizations are concerned by the existing and the oncoming registration procedures. 

The business sector concerned by the centralised procedure, and by way of consequence, the full 
impact of the fees Regulation is marked by large multinational companies. 

The costs of developing new medicinal products are very high (for a major innovatory product 
up to 200 million  ECU).  Therefore, companies seek to attain the  "critical  mass" necessary  to 
finance research and development by way of concentration. 

Smaller or medium sized companies in this business sector manufacture primarily conventional 
medicinal  products  whose  patent  has  expired.  They  are  mostly  geared  to  decentralised 
procedures  linked to national  and even  regional  markets and would  therefore  prefer  to obtain 
national  marketing authorisations which would  largely rail under national  fee  schemes,  except 
for the costs of arbitration, in case of conflict. 

Finally, there are a limited number of small, highly innovatory companies concentrating on basic 
research into new therapies. 

3. What will business have to do to comply with the proposal ? 

From  1995  onwards,  the  EMEA  will  play  an  active  role  in  two  out  of  three  then  available 
registration procedures by formulating opinions of the highest possible scientific  level about the 
quality, safety and efficacy of a medicinal product for human and veterinary use. 

Under the centralised procedure, which concerns innovatory medicinal  products, the opinion of 
the  Agency  will  lead  to  a  final  decision  on  the  application  for  a  Community  marketing 
authorization.  The decision will  be taken by either the Commission  within the framework  of a 
regulatory committee procedure or the Council. 

The decentralised procedure which will apply to the substantial majority of medicinal products is 
based upon the principle of mutual recognition by a variable number of Member States of each 
others existing marketing authorisations.  In the event of disagreements between Member States, 
a binding arbitration procedure at the level of the Agency will apply from 1998 onwards (on an 
optional basis from 1.1.95). 

National  registration  procedures  limited  to  applications  of  local  interest  concerning  a  single 
Member State remain possible. 

Pharmaceutical companies making use of the new registration procedures will  have to  pay fees 
to the Agency for the work done by it just as they pay fees to Member States' authorities in order 

24 

to obtain  national  marketing authorisations.  It has to  be noted that the choice  of  the suitable 
procedure, save the marketing of medicinal  products derived from biotechnology, rests with the 
applicant. 

4. Economic effects of the measure 

Fees  levied  by  Member  States' authorities  for  12 different  marketing  authorisation  for  a  new 
medicinal product currently total nearly 210,000 ECU for human medicines.  This concerns only 
the first application and does not cover different strengths etc. 

Under  the  terms  of  this  proposal,  a  pharmaceutical  company  applying  for  a  Community 
marketing authorisation in the centralised procedure would have to pay a standard fee of 200,000 
ECU.  This fee would be defined as a comprehensive fee covering at the choice of the applicant 
a  bundle  of  applications  for  different  strengths,  schedules  of  dosage,  routes  and  forms  of 
administration,  and, as  regards  veterinary  medicinal  products,  the  establishment  of  Maximum 
Residue  Limits.  This  is  meant  to  be  a  major  incentive  for  streamlined  procedures  and 
better cost-efficiency.  It  meets  the  requirement  put  forward  by industry  of  having  "good 
value for money". 

As the overall cost of research and development of a new medicinal  product in general  exceeds 
200  millions  ECU,  the  comprehensive  cost  for  industry  to  obtain  a  Community  marketing 
authorization represents but one per thousand of the overall research cost. 

Compared to the cost, the benefit derived from the new centralised procedure is significant. 

D  It is one single procedure throughout the Community instead of 12 national procedures. 

D  It is a far less time consuming procedure compared to the national  procedures lasting quite 

often for four or five years. 

D  It leads to a single marketing authorisation immediately valid in all Member States. 

D  It is more value for less money. 

As regards the decentralised procedure, an arbitration fee of 40,000 ECU would be levied by the 
Agency  for  its  services  in connection  with the  settlement  of disputes  between  Member  States 
about the mutual recognition of each others marketing authorizations. 

Here  too,  the  benefit  derived  from  a  system  of  mutually  recognised  national  marketing 
authorisations  after  a  binding  Community  arbitration  procedure  clearly  outweighs  the  cost  in 
form of the above mentioned arbitration fee. 

In more  general  terms, the  creation  of  the  EMEA  and  its  leading  role  in  the  future  system's 
centralised  and  decentralised  registration  procedure  will  facilitate  the  access  of  all  medicinal 
medicinal  products  to  a  Community  scale  market.  This  will  lead  to  a  substantial  gain  in 

25 

competitiveness  for  both  large  scale  multinational  companies  and  small  and  medium  sized 
entreprises.  The  latter  quite  often  lack  the  resources 
to  establish  local  subsidiaries  in  the 
different  Member States to deal directly with national regulatory authorities. 

The  access,  especially  for  small  and  medium  sized  businesses,  to  the  single  European 
market  will  be  further  enhanced  by  the  transparency  of  the  future  system's  registration 
procedures. 

Finally, the EMEA will  foster the pre-and post-marketing co-operation between  Member  States 
to  ensure  the  quality,  safety  and  efficacy  of  all  medicinal  products  circulating  in  the  Single 
European Market and will help to achieve greater international harmonisation. 

5. Measures to take account of the specific situation of small and medium sized firms. 

A special derogatory clause  is provided  for  under Art. 6 of the proposal  to take due account  of 
specific  situations which  might arrise for  SMEs.  The case of the above mentioned  small  sized 
but highly innovatory companies concentrating on basic research  into new therapies can be seen 
in this context. 

6.  Consultations 

Extensive consultation  has preceeded the adoption of the Basic Regulation as well as the current 
proposal on fees payable to the Agency. 

A working paper on the financial  arragements for the Agency has been circulated  early  1993 to 
industry  and  other  interested  parties  with  the  invitation  to  submit  comments  by  1.5.93.  The 
dialogue  with  industry  continued  in  the  following  months  leading  to  a  final  consultation  of 
organizations  representing  thé  interests  of  the  pharmaceutical  industry  at  Community  level  in 
December 1993. 

26 

:°.SN 02: > . :. 

i 

N 

OM(94) 167 final 

DOCUMENTS 

EN 

15 09 

Catalogue number : CB-CO-94-184-EN-C 

ISBN 92-77-68121-7 

Office  for Official Publications of the European Communities 

L-2985 Luxembourg 

&