Report on the annual accounts of the European Medicines Agency for the financial year 2007 together with the Agency's replies
Date: 2008-09-18
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

5.12.2008

EN

Official Journal of the European Union

C 311/27

REPORT

on the annual accounts of the European Medicines Agency for the
financial year 2007 together with the Agency’s replies

(2008/C 311/05)

CONTENTS

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

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

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

1-2

3-6

7-9

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

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

28

28

28

30

33

Paragraph

Page

C 311/28

EN

Official Journal of the European Union

5.12.2008

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 2007 are presented inTables 2,
3 and 4for information purposes.

Reliability of the accounts

The Agency’s accounts for the financial year ended 31 Decem-
ber 2007 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

OBSERVATIONS

3.
This Statement is addressed to the European Parliament
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.

4.
The Agency’s accounts for the financial year ended
31 December 2007 (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.

5.
The Court conducted its audit in accordance with the IFAC
and ISSAI (4) 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 15 June 2008 and received by the

Court on 1 July 2008.

The Agency’s

7.
for 2007 amounted
final budget
to 163,1 million euro as compared with 138,7 million euro the
previous year. Of the budget appropriations, 32 million euro
were carried over and 4 million euro were cancelled. As in 2006,
the high level of carry-overs for administrative expenditure,
18,9 million euro, was mainly due to the programme Telematics
for the regulation of medical products. The Agency and the other
parties involved in this programme must ensure better planning
and monitoring of the implementation of the programme. This
situation is at odds with the annuality principle. The Agency
should consider using the differentiated appropriations system for
the Telematics programme which is more suitable for the bud-
getary management of such programmes.

8.
The audit of the tendering procedures showed weaknesses:
insufficient justification of the chosen procedures (5) and inad-
equate evaluation methods for the price criteria (6). In the case of
a joint public procurement procedure with five other Agencies,
the volume of the services to be procured had not been adequately
identified. This resulted in difficulties in evaluating the cost of the
bids as well as the need to review the volumes and values of the
services to be procured. The Agency should aim to improve the
quality of its public procurement procedures in order to address
the issues highlighted above.

(4) International Federation of Accountants (IFAC) and International Stan-

dards of Supreme Audit Institutions (ISSAI).

(5) Two cases.
(6) Three cases.

5.12.2008

EN

Official Journal of the European Union

C 311/29

In its 2006 report (1), the Court observed that the Agency
9.
had not performed a comprehensive analysis of the costs incurred
by rapporteurs. The Management Board of the Agency has estab-
lished a Costing Group which at the end of 2007 prepared a
report on a generally accepted international costing methods

and a proposal for an alternative option for remunerating the rap-
porteurs. The Court welcomes the steps the Agency has made in
order to address the issue of the evaluation of the costs and calls
for further progress.

This report was adopted by the Court of Auditors in Luxembourg at
18 September 2008.

its meeting of

For the Court of Auditors
Vítor Manuel da SILVA CALDEIRA
President

(1) OJ C 309, 19.12.2007, p. 34.

Areas of Community competence
deriving from the Treaty

Competences of the Agency as defined in Regulation (EC) No 726/2004 of the
European Parliament and of the Council

Governance

Table 1

European Medicines Agency (London)

A high level of human health
protection shall be ensured in the
definition and implementation
of all Community policies and
activities.

be

Community action, which shall
complement national policies,
shall
towards
directed
improving public health, pre-
venting human illness and dis-
eases and obviating sources of
danger to human health. (…)

(Article 152 of the Treaty)

Objectives

Tasks

— To coordinate the scientific
resources that
the Member
States’ authorities make avail-
able to the Agency for the
authorisation and supervision
for
of medicinal products
human and veterinary use.

— To provide the MemberStates
and the institutions of
the
European Union with scien-
tific advice on medicinal prod-
ucts for human or veterinary
use.

— To coordinate the scien-
tific evaluation of medici-
nal products which are
subject
to Community
marketing authorisation
procedures.

— To coordinate the super-
vision of medicinal prod-
ucts which have been
authorised within the
(pharma-
Community
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 alter-
nate from each MemberState, advises on any question
relating to the evaluation of medicinal products for
human use.

2. The Committee for Medicinal Products for Vet-
erinary Use, consisting of one member and one alter-
nate from each MemberState, advises on any question
relating to the evaluation of veterinary medicinal prod-
ucts.

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

5. The Paediatric Committee, consisting of
five
members with their alternates of the Committee for
Medicinal Products for Human Use, one member and
one alternate from each Member State, six members and
alternates representing healthcare professionals and
patients’ associations, responsible for the scientific
assessment and agreement of paediatric investigation
plans and for the system of waivers and deferrals thereof.

the Commission,

6. The Management Board consists of one member
and one alternate from each MemberState, two repre-
sentatives of
two representatives
appointed by the European Parliament, two representa-
tives from patients’ organisations, one representative
from doctors’ organisations and one representative from
veterinarians’ organisations. The Board adopts the work
programme and the annual report.

7. The Executive Director is appointed by the Man-
agement Board on a proposal from the Commission.

8. External audit

Court of Auditors.

9. Discharge authority

Parliament acting on recommendation of the Council.

Source:

Information supplied by the Agency.

Resources made available to the Agency
in 2007
(Data for 2006)

Products and Services in 2007
(Data for 2006)

Final budget for 2007:

Medicinal Products for Human Use

163,1 million
lion euro)

euro

(138,7 mil-

— Applications

for marketing

authorisations: 91 (79);

Community contribution (excluding
subsidy for orphan medicines):
24,3 % (21,6 %)

Staff numbers at 31 Decem-
ber 2007:

441 (424) posts provided for in the
establishment plan

Posts occupied: 422 (395)

95 (77) other staff (auxiliary agents,
contract agents seconded national
experts, employment agency staff)

Total staff:

518 (472)

Assigned to the following duties:

Operational: 444 (406)

Administrative: 74 (66)

— Favourable opinions: 58 (51);

— Average

evaluation

time:

171 days (171 days);

— Opinions after authorisation:

1 899 (1 380);

— Pharmacovigilance:
reports

150 188
reports);

(94 081

— Periodic safety update reports:

313 (273);

— Scientific opinions: 215 (193);

— Procedures for mutual recogni-

tion: 10 932 (9 241);

— Applications

for

paediatric
investigation plans: 85 (0) relat-
ing to 202 (0) indications.

Medicinal Products for Veterinary
Use

— New applications: 14 (5);

— Applications in respect of vari-

ants: 100 (56);

— Inspections: 185 (128).

Orphan Medicinal Products

— Applications: 125 (104);

— Favourable opinions: 97 (81).

SMEs

— Requests for SME status 212

(145);

— Applications for fee reduction

or deferrals 81.

C
3
1
1
/
3
0

E
N

O

f
f
i
c
i
a
l

J
o
u
r
n
a
l

o
f

t
h
e

E
u
r
o
p
e
a
n
U
n
o
n

i

.

.

5
1
2
2
0
0
8

.

.

5
1
2
2
0
0
8

European Medicines Agency (London) — Implementation of the budget for the financial year 2007

Table 2

Source of revenue

Own revenue

Community subsidies

Other subsidies

Other revenue

Revenue

Revenue entered in the
final budget for the
financial year

113 659

40 548

6 706

2 200

Total

163 113

Revenue collected

Allocation of expenditure

116 799

40 548

5 475

2 467

165 289

Title I
Staff

Title II
Administration

Title III
Operating activities

Expenditure

Final budget appropriations

(1 000 euro)

Appropriations carried over from
previous year(s)

entered

committed

paid

carried
over

cancelled

entered

paid

cancelled

51 132

49 871

49 107

764

1 261

767

661

106

47 198

44 758

25 863

18 895

2 440

15 061

14 360

64 783

64 497

52 118

12 379

286

13 585

13 257

701

328

Total

163 113

159 126

127 088

32 038

3 987

29 413

28 278

1 135

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.

E
N

O

f
f
i
c
i
a
l

J
o
u
r
n
a
l

o
f

t
h
e

E
u
r
o
p
e
a
n
U
n
o
n

i

C
3
1
1
/
3
1

C 311/32

EN

Official Journal of the European Union

5.12.2008

European Medicines Agency (London) — Economic outturn account for the financial years 2007 and 2006

Table 3

(1 000 euro)

2007

2006

Operating revenue

Fees and other revenue

Community subsidies

Operating expenses

Staff expenses

Other administrative expenses

Operational expenses

120 305

41 144

Total (a)

161 449

50 165

33 513

67 402

Total (b)

151 080

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)

10 369

– 1 188

– 1 188

9 181

Source: Data supplied by the Agency. This table summarises the data provided by the Agency in its annual accounts.

119 039

31 503

150 542

45 150

26 607

63 437

135 194

15 348

1 433

1 433

16 781

European Medicines Agency (London) — Balance sheet at 31 December 2007 and 2006

Table 4

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

Reserves

Accumulated surplus/deficit

Economic result for the year

(1 000 euro)

2007

2006

17 973

12 673

32 036

34 318

97 000

2 909

41 021

43 930

53 070

43 889

9 181

53 070

Total assets

Total liabilities

Net assets

Net capital

14 889

6 695

26 045

37 508

85 138

2 699

38 550

41 249

43 889

27 109

16 781

43 889

Source: Data supplied by the Agency. This table summarises the data provided by the Agency in its annual accounts.

5.12.2008

EN

Official Journal of the European Union

C 311/33

THE AGENCY’S REPLIES

The Agency takes note of the Court’s observations. Reference is made to the particular difficulties in
7.
complying fully with the annuality principle when it comes to the implementation of multi-annual and mul-
tinational Telematics programmes, and also, to strictly observe the requirements of sound financial manage-
ment. The Agency commits itself to make every effort to reduce the level of carry-overs and to consider the
proposal of applying differentiated appropriations.

The Agency has established a formula for the objective evaluation of price as an award criteria, with

8.
effect from 17 March 2008.

In the case of the joint public procurement procedure with five other agencies, the original estimate had to be
revalued due to the technological advances that occurred between the definition of the services to be provided
and the effective launch of the procurement procedure. The Agency commits itself to make every effort to
increase the quality of its public procurement procedures.

The Agency notes that the Court welcomes the progress the Agency has made. At its meeting of
9.
12 June 2008 the Management Board endorsed the proposal to implement a pilot phase in order to introduce
a new remuneration system for (co)rapporteurs after the pilot phase by the end of 2009.