Report on the annual accounts of the European Medicines Agency for the financial year 2006 together with the Agency's replies
Date: 2007-09-27
Institutions: European Court of Auditors
Subjects: European Court of Auditors, European Medicines Agency, administration of the Institutions, financial control, implementation of the budget, powers of the institutions (EU), report

C 309/34

EN

Official Journal of the European Union

19.12.2007

REPORT

on the annual accounts of the European Medicines Agency for the
financial year 2006 together with the Agency’s replies

(2007/C 309/07)

CONTENTS

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

STATEMENT OF ASSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

OBSERVATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1-2

3-6

7-8

Tables 1 to 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The Agency’s replies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

35

35

35

37

39

Paragraph

Page

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Official Journal of the European Union

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INTRODUCTION

The Court has thus obtained a reasonable basis for the

6.
Statement set out below.

The European Medicines Agency (hereinafter ‘the Agency’)
1.
was created by Council Regulation (EEC) No 2309/93 of
22 July 1993, which was
replaced by Regulation (EC)
No 726/2004 of the European Parliament and of the Council of
31 March 2004 (1). The Agency operates through a network and
coordinates the scientific resources made available by the national
authorities in order to ensure the evaluation and supervision of
medicinal products for human or veterinary use.

2.
Table 1 summarises the Agency’s competences and activi-
ties. Key data summarised from the financial statements drawn up
by the Agency for the financial year 2006 is presented inTables 2,
3 and 4 for information purposes.

Reliability of the accounts

The Agency’s accounts for the financial year ended 31 Decem-
ber 2006 are, in all material respects, reliable.

Legality and regularity of the underlying transactions

The transactions underlying the Agency’s annual accounts,
taken as a whole, are legal and regular.

The observations which follow do not call the Court’s State-
ment into question.

STATEMENT OF ASSURANCE

This Statement is addressed to the European Parliament
3.
and the Council in accordance with Article 185(2) of Council
Regulation (EC, Euratom) No 1605/2002 (2); it was drawn up fol-
lowing an examination of the Agency’s accounts, as required by
Article 248 of the Treaty establishing the European Community.

OBSERVATIONS

The Agency’s accounts for the financial year ended
4.
31 December 2006 (3) were drawn up by its Executive Director,
pursuant to Article 68 of Regulation (EC) No 726/2004, and sent
to the Court, which is required to give a Statement of Assurance
on their reliability and on the legality and regularity of the under-
lying transactions.

7.
As regards the implementation of the budget for adminis-
trative expenditure (Title II), the utilisation rate for commitment
appropriations was less than 60 %. More than 40 % of the com-
mitments, in particular in the area of Information Technology,
were carried over to the financial year 2007. Thus, the budgetary
principle of annuality was not strictly observed.

5.
The Court conducted its audit in accordance with the IFAC
and INTOSAI International Auditing Standards and Codes of Eth-
ics, insofar as these are applicable in the European Community
context. The audit was planned and performed to obtain reason-
able assurance that the accounts are reliable and that the under-
lying transactions are legal and regular.

(1) OJ L 214, 24.8.1993, p. 18 and OJ L 136, 30.4.2004, p. 1. Pursuant
to the latter Regulation the Agency’s original name, the European
Agency for the Evaluation of Medicinal Products, was changed to the
European Medicines Agency.

(2) OJ L 248, 16.9.2002, p. 1.
(3) These accounts were drawn up on 21 June 2007 and received by the

Court on 17 July 2007.

8.
Article 12(4) of the Fee Regulation (4) states ‘Any review of
the fees shall be based on an evaluation of the Agency’s costs and
on the basis of the related costs of the services provided for by the
Member States. Those costs shall be calculated in accordance with
generally accepted international costing methods, which shall
be adopted in accordance with Article 11(2).’ Up to now,

(4) As amended by Council Regulation (EC) No 1905/2005 amending
Council Regulation (EC) No 297/95 (OJ L 304, 23.11.2005, p. 1).

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Official Journal of the European Union

19.12.2007

the Agency’s customers are billed an amount which is divided
into two parts: one part covers the Agency’s costs and the other
is repaid to the Member States’ rapporteurs to cover their own. As
the Member States’ rapporteurs did never provide full evidence or
documentation of their real costs, this situation was in breach of

the Fee Regulation. The Agency has not been in a position to
make a comprehensive analysis of the costs incurred by Member
States’ rapporteurs in order to obtain an objective and docu-
mented basis on which to adapt its payments to them and, con-
sequently, the fees charged to its customers.

This report was adopted by the Court of Auditors in Luxembourg at
27 September 2007.

its meeting of

For the Court of Auditors
Hubert WEBER
President

Areas of Community
competence deriving from
the Treaty

A high level of human health
protection shall be ensured in
the definition and implemen-
tation of all Community poli-
cies and activities.

Community action, which
shall complement national
shall be directed
policies,
towards
improving public
health, preventing human ill-
ness and diseases and obviat-
ing sources of danger
to
human health. (…)

(Article 152 of the Treaty)

Table 1

European Medicines Agency (London)

Competences of the Agency as defined in Regulation (EC)
No 726/2004 and Regulation (EC) No 141/2000

Governance

Objectives

Tasks

— To coordinate the scien-
tific resources that the
Member States’ authori-
ties make available to the
Agency for the authori-
sation and supervision of
medicinal products for
human and veterinary
use;

— To provide the Member
States and the institu-
tions of
the European
Union with scientific
advice
on medicinal
products for human or
veterinary use.

evaluation

— To coordinate the scien-
of
tific
products
medicinal
which are
to
Community marketing
authorisation
proce-
dures;

subject

— To coordinate the super-
vision of medicinal prod-
ucts which have been
authorised within the
Community
(pharma-
covigilance);

— To advise on the maxi-
mum limits for residues
of veterinary medicinal
products which may be
accepted in foodstuffs of
animal origin;

— To coordinate verifica-
tion of compliance with
the principles of good
manufacturing practice,
good laboratory practice
and good clinical prac-
tice;

— To record the status of
marketing authorisations
granted for medicinal
products.

1. The Committee for Medicinal Products
for Human Use, consisting of one member and
one alternate from each Member State, advises on
any question relating to the evaluation of medici-
nal products for human use.

2. The Committee for Medicinal Products
for Veterinary Use, consisting of one member
and one alternate from each Member State, advises
on any question relating to the evaluation of vet-
erinary medicinal products.

3. The Committee for Orphan Medicinal
Products, consisting of one member and one
alternate from each Member State, advises on any
question relating to the evaluation of orphan
medicinal products.

4. The Committee on Herbal Medicinal
Products, consisting of one member and one
alternate from each Member State, advises on any
question relating to the evaluation of herbal
medicinal products.

5. The Management Board consists of one
member and one alternate from each Member
State, two representatives of the Commission, two
representatives appointed by the European Parlia-
ment, two representatives from patients’ organi-
sations,
from doctors’
representative
organisations and one representative from veteri-
narians’ organisations. The Board adopts the work
programme and the annual report.

one

6. The Executive Director is appointed by the
Management Board on a proposal from the Com-
mission.

7. External audit: European Court of Auditors

8. Discharge authority: Parliament on a rec-
ommendation from the Council.

Source:

Information supplied by the Agency.

.

1
9
1
2
2
0
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7

.

Resources made available
to the Agency in 2006
(2005)

Final budget for 2006:

138,7 (111,8) million euro

Community
contribution
(excluding subsidy for orphan
medicines): 21,63 % (22,7 %)

Staff numbers at 31 Decem-
ber 2006:

424 (379) posts provided for
in the establishment plan

Posts occupied: 395 (337,5)

+ 77 (34) other staff (auxiliary
staff, contract staff, seconded
experts,
national
employment-agency staff)

Total staff: 472 (371,5)

Assigned to the following
duties:

—
— Operational: 406 (302,5)

— Administrative: 66 (69)

Products and Services in 2006
(2005)

Medicinal
Human Use

Products

for

— Applications for market-
ing authorisations: 79 (43)

— Favourable opinions: 51

(24)

— Average evaluation time:
171 days (203 days)

— Opinions after authorisa-
tion: 1 380 (1 148)

— Pharmacovigilance:

94 081 reports (91 565
reports)

— Periodic

safety

update

reports: 273 (279)

— Scientific opinions: 193

(135)

— Procedures for mutual rec-

ognition: 9 241 (8 451)

Medicinal Products for Vet-
erinary Use

— New applications: 5 (11)

— Applications in respect of

variants: 56 (40)

— Inspections: 128 (114)

Orphan Medicinal Products

— Applications: 104 (118)

— Favourable opinions: 81

(88)

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European Medicines Agency (London) — Implementation of the budget for the financial year 2006

Table 2

Source of revenue

Own revenue

Community subsidies

Other subsidies

Other revenue

Revenue

Revenue entered
in the final budget
for the financial year

92 580

30 650

8 160

7 286

Total

138 676

Revenue collected

Allocation of expenditure

Expenditure

Final budget appropriations

(1 000 euro)

Appropriations carried over from
previous year(s)

entered

committed

paid

carried
over

cancelled

entered

paid

cancelled

94 556

32 551

7 374

6 820

141 301

Title I
Staff

Title II
Administration

Title III
Operating activities

44 921

43 709

42 941

768

1 212

700

563

136

34 454

34 007

18 946

15 061

447

10 041

8 535

1 505

59 301

58 431

44 846

13 585

870

8 092

7 603

490

Total

138 676

136 147

106 733

29 414

2 529

18 833

16 701

2 131

NB: Any discrepancies in totals are due to the effects of rounding.
Source: Data supplied by the Agency. This table summarises the data provided by the Agency in its annual accounts. Revenue collected and payments are estimated on a cash basis.

European Medicines Agency (London) — Economic outturn account for the financial
years 2006 and 2005

European Medicines Agency (London) — Balance sheet at 31 December 2006
and 2005

Table 3

Table 4

Operating revenue
Fees and other revenue
Community subsidies

Operating expenses
Staff expenses
Other administrative expenses
Operational expenses

Total (a)

Total (b)
Surplus/(deficit) from operating activities (c = a – b)

Financial operations revenue (e)

Surplus/(deficit) from non-operating activities (f = e)
Economic result for the year (g = c + f)

(1 000 euro)

2006

2005 (1)

119 039
31 503
150 542

45 150
26 607
63 437
135 194
15 348
1 433
1 433
16 781

72 979
28 957
101 936

40 057
22 459
37 849
100 365
1 571
2 257
2 257
3 828

Non-current assets
Intangible fixed assets
Tangible fixed assets
Current assets
Short-term receivables
Cash and cash equivalents

Current liabilities
Provisions for risks and charges
Accounts payable

Net assets
Accumulated surplus/deficit
Economic result for the year

(1) For the 2005 published accounts, the accrual accounting had not been fully implemented.

Total assets

Total liabilities

Total net assets
Total liabilities and net assets

(1 000 euro)

2006

2005 (1)

14 889
6 695

26 045
37 508
85 138

2 699
38 550
41 249

27 108
16 781
43 889
85 138

10 492
6 945

14 490
29 934
61 861

1 214
33 539
34 753

23 280
3 828
27 108
61 861

Source: Data supplied by the Agency . This table summarises the data provided by the Agency in its annual accounts: these accounts are drawn up on an accrual basis.

(1) For the 2005 published accounts, the accrual accounting had not been fully implemented.

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THE AGENCY’S REPLIES

The total automatic carry over to 2007 on Title 2
7.
amounted to 15 million euro, of which 8 million euro was for
Information Technology (Chapter 21). The Agency is in the pro-
cess to develop and implement a multi-annual programme of EU
Telematics for the regulation of medicinal products. The gover-
nance process and the nature of the projects makes it dificult to
strictly observe the annuality principle, especially as many gover-
nance steps are outside the control of the EMEA. Every effort is
made to bring down the level of automatic carry overs in the
future.

The Agency has together with the national competent
8.
authorities made long efforts to assess the costs incurred by the
Member States’ rapporteurs. At its December 2006 meeting the
Management Board of the agency ‘took the decision in principle
to revise the scale of fees system’ and decided to establish a cost-
ing group in order to ‘… to prepare and agree on generally
accepted international costing methods referred to in Article 12
of the fee Regulation … Representatives from all national com-
petent authorities will be invited to participate in this work.’