LICENCE FEES FOR MEDICINAL PRODUCTS FOR HUMAN USE ONLY PROPOSALS FOR APRIL 2002

Transcription

1 Fax: To all licence holders and representative associations Dear Sir/Madam Our Ref: MLX/ November 2001 LICENCE FEES FOR MEDICINAL PRODUCTS FOR HUMAN USE ONLY PROPOSALS FOR APRIL 2002 PROPOSALS RELATING TO THE MEDICINES (PRODUCTS FOR HUMAN USE - FEES) REGULATIONS 1995, THE MEDICINES (HOMOEOPATHIC PRODUCTS FOR HUMAN USE) REGULATIONS 1994 AND THE MEDICAL DEVICES (CONSULTATION REQUIREMENTS) (FEES) REGULATIONS 1995 INTRODUCTION 1. In accordance with section 129 (6) of the Medicines Act 1968 (as read with Section 1(3)(b) of the Medicines Act 1971), I am writing to consult you on proposals to amend the Fees Regulations 1. I am also taking this opportunity to consult you about proposed changes to the Homoeopathic Registration Scheme 2 and the Medical Devices (Consultation Requirements) (Fees) Regulations All of these would only affect medicinal products for human use and proposed changes will be made through one Statutory Instrument. BACKGROUND AND MAIN PROPOSAL 2. Fees were increased by 5% from April 2001, as part of a programme to help recover our financial position to one of cost recovery again. The proposal for April 2002 includes an across-the-board increase of 8% for all fees as well as a number of other proposals (some of which will result in a reduction of fees payable for certain applications). Annex A shows the effect of this proposal on individual fee levels. 3. The fee increases agreed last year still did not allow us to cover our costs in this year and will probably result in the complete erosion of our surplus. The impact of this year s proposed fee increase should result in us achieving break even in the year. Indeed, this level of fee increase is essential to help us to maintain our high levels of service, and maintain a sound financial base. A lower increase will impair our ability to deliver to the current high standards. 1 The Medicines (Products for Human Use - Fees) Regulations 1995 (S.I No.1116 as amended by SI 1996 No 683, S.I 1998 No. 574, S.I No. 566, S.I No 592; S.I No 3031 and S.I No.795) 2 The Medicines (Homoeopathic Medicinal products for Human Use) Regulations 1994 (S.I.1994 No.105 as amended by S.I.1995 No. 541, S.I No 482, S.I 1998 No. 574, S.I No. 566, S.I No No 3031 and S.I No.795) 3 The Medical Devices (Consultation Requirements) (Fees) Regulations 1995 (S.I.1995 No.449 as amended by SI 1996 No 622, S.I 1998 No. 574 S.I No. 566, S.I No No 3031 and S.I No.795) Sj/es/feesMLX2002.doc/20/11/01 Page 1 of 15

2 OTHER PROPOSALS 4. Other proposals for change on which we would like your views include: The introduction of a specific fee for the renewal of outgoing mutual recognition applications (this was part of last year s proposals but was not implemented in April 2001 we propose to introduce this in April 2002); New capital fees for applications for legal reclassification; A new category of variation fee, currently known as Type 0, to reflect the European variations system (this is likely to be introduced after April 2002 depending on when the EC Regulations come into force); A change in the definition of complex abridged applications to correct an anomaly in fee charging; A technical amendment to the Medicines for Human Use (Marketing Authorisations Etc.) Regulations 1994 to regularise the publishing of granted licences in the Agency s MAIL. 5. The detail of each of these proposals is at Annex B. COMMENTS 6. Any comments on these proposals should be sent to Mrs Yvonne Muhammad, 21st Floor, Market Towers by 8 February We regret that we cannot take comments over the telephone but you may send your comments by fax on the following number or to: yvonne.muhammad@mca.gsi.gov.uk. REGULATORY IMPACT ASSESSMENT 7. In considering proposals for new regulations, the Government places great importance on giving due weight to the proposals' likely impact on business. To assess costs and benefits of all such proposals, a Regulatory Impact Assessment (RIA) is produced and made available to business on request - a draft RIA is attached at Annex C. The RIA covers the detail of the proposals above, it will be revised according to the response to the consultation. 8. In giving your views on the proposals described in this document, it would be particularly helpful if you could identify and quantify any additional direct or indirect costs (recurring and non-recurring) that would be likely to arise for your business as a result. We would particularly like to hear from smaller companies. Recurring costs- Non-recurring costs- e.g. extra administration, consumable materials e.g. additional expenditure on computer systems and other capital expenditure. 9. We are sending copies of this letter to all representative organisations, to all licence and marketing authorisation holders and to other interested parties. Following the end of the consultation period, copies of the responses to the consultation can be obtained from Yvonne Muhammad. Yours sincerely Sue Jones Manager, Fees Policy Unit Executive Support Sj/es/feesMLX2002.doc/20/11/01 Page 2 of 15

3 ANNEX A PROPOSED FEES PAYABLE FROM 1 APRIL 2002 CURRENT PROPOSED LICENCE APPLICATIONS PRODUCT LICENCES MAJOR National Fee 69,127 74,657 MAJOR (Reduced in exceptional 22,622 24,431 circumstances 1 OR Orders under Section 104/105) OUTGOING MUTUAL RECOGN - 1 ST WAVE 30,000 32,400-2 ND WAVE 20,000 21,600 INCOMING MUTUAL RECOGN 48,389 52,260 ABRIDGED COMPLEX National Fee 18,853 20,361 OUTGOING MUTUAL RECOGN - 1 st WAVE - 2 nd WAVE INCOMING MUTUAL RECOGN 7,500 5,000 13,196 8,100 5,400 14,252 ABRIDGED STANDARD National Fee 6,913 7,466 OUTGOING MUTUAL RECOGN - 1 st WAVE - 2 nd WAVE INCOMING MUTUAL RECOGN ABRIDGED SIMPLE 3,000 2,500 4,835 1,885 3,240 2,700 5,222 2,036 OUTGOING MUTUAL RECOGN INFORMED CONSENT OUTGOING MUTUAL RECOGN DUPLICATES For all of the above when undertaken at the same time as the lead application - 1 st WAVE - 2 nd WAVE 1,795 1,795 1,795 1,939 1,939 1,939 PARALLEL IMPORT CHANGE OF OWNERSHIP DRUG-DEVICE COMBINATION PRODUCTS HOMOEOPATHIC REGISTRATIONS 1, See following table See following table 1, MANUFACTURERS' LICENCES STANDARD 2,070 2,236 NON ORTHODOX PRACTITIONERS (NOP) CHANGE OF OWNERSHIP WHOLESALE DEALERS' STANDARD LICENCES REDUCED RATE CHANGE OF OWNERSHIP LICENCE RENEWAL APPLICATIONS MANUFACTURERS' LICENCES NOP Sj/es/feesMLX2002.doc/20/11/01 Page 3 of 15

4 PROPOSED FEES FROM 1 APRIL 2002 CURRENT PROPOSED LICENCE VARIATION APPLICATIONS MARKETING AUTHORISATIONS See following table REDUCED MAJOR 3 PL(PI) STANDARD ADMINISTRATIVE MANUFACTURERS' LICENCES STANDARD ADMINISTRATIVE NOP WHOLESALE DEALERS' LICENCES STANDARD ADMINISTRATIVE HOMOEOPATHIC REGISTRATIONS NEW TECHNICAL OTHER EXPORT CERTIFICATES PER SET (1 ORIGINAL + 2 COPIES) PER SET (URGENT) EXTRA COPIES (3rd COPY +) CLINICAL TRIAL CERTIFICATES APPLICATION 14,579 15,940 RENEWAL 1,885 2,036 VARIATION (STANDARD) INSPECTION FEES (including intermediate biological sites) 4 VARIATION (ADMINISTRATIVE) STERILE SITE SUPERSITE 12,568 13,573 MAJOR 6,911 7,464 STANDARD 4,400 4,752 MINOR 2,136 2,307 NON STERILE AND SITES USED FOR STERILISATION ONLY SUPERSITE 7,541 8,144 MAJOR 4,400 4,752 STANDARD 3,643 3,934 MINOR 1,964 2,121 ASSEMBLY ONLY SUPERSITE MAJOR 5,906 3,153 6,378 3,405 STANDARD 2,110 2,278 MINOR WHOLESALE DEALER STANDARD REDUCED RATE WHOLESALE DEALER (GSL) NOP 2 SITE NOTES 1. To which Section G of Part IV of the Annex to Council Directive 75/318/EEC refers. 2. Special reduced rate to apply for wholesale dealers handling GSL products only and for registered retail pharmacies and small wholesale dealers where wholesaling of licensed products does not exceed 15% or 35,000 of total turnover in licensed products. 3. Variations to Reduced major applications which seek to extend the range of the drug's use attract a full Major Application Fee (except where the extension is to another limited use area). 4. Supersite = Manufacturing site where 250 or more employees (relevant persons) are involved. Major = between 60 and 250 employees. Standard = 10 or more but less than 60 employees. Minor = less than 10 employees. Sj/es/feesMLX2002.doc/20/11/01 Page 4 of 15

5 PROPOSED FEES FOR HOMOEOPATHIC REGISTRATION SCHEME FROM 1 APRIL 2002 CURRENT 5 or fewer stocks More than 5 Stocks PROPOSED 5 or fewer stocks More than 5 Stocks Standard Reduced : Stock already assessed Formulation already assessed Both stock and formulation already assessed PROPOSED FEES FOR VARIATIONS TO MARKETING AUTHORISATIONS FROM 1 APRIL 2002 Variation Type Reference Member State Reference Member State National/ Concerned Member State National/ Concerned Member State Current Fee Proposed Fee Current Fee Proposed Fee Type 0* N/A 203* N/A 130* Type I Type II Type II 9,802 10,586 6,282 6,784 Complex * to take effect in-year when introduced by European system Sj/es/feesMLX2002.doc/20/11/01 Page 5 of 15

6 Device incorporating: DRUG/DEVICE COMBINATION PRODUCTS Current Fee Proposed fee From 1 April 2002 Current Fee in respect of request by Notified Body to the MCA to supply an additional assessment report Proposed Fee From 1 April 2002 known medicinal substance from source previously used in medicinal products or in medical devices in respect of which the MCA has previously been consulted 3,029 3, known medicinal 6,726 7,264 1,676 1,810 substance from new source new active 30,972 33,450 7,690 8,305 substance NOTES 1. Where a device incorporates two or more medicinal substances the fee will relate to one of the substances only - the one which commands the highest fee. 2. The same fee will apply regardless of the strength or concentration of the medicinal substance. But only one fee will apply to multiple applications made at the same time for a range of similar devices (e.g. a range of catheters made of the same material) incorporating the same medicinal substance at the same level. 3. The fee for an additional assessment report will apply when changes to the device require assessment under the terms of the Directive, and at any time after the initial assessment when further data is submitted to the MCA for assessment. Sj/es/feesMLX2002.doc/20/11/01 Page 6 of 15

7 PROPOSED PERIODIC FEES FROM 1 APRIL PER LICENCE PER PERIOD TYPE OF LICENCE CURRENT PROPOSED New Active Substance 1 12,209 13,186 Derivatives with a different Route of Administration 1 5,027 5,429 or Complex Abridged 2 Other derivatives ,666 Legal Status/Sale Category POM P GSL NONE4 FEE TYPE - see note 3 Standard fee Reduced rate fee 'Maintenance' fee Standard fee Reduced rate fee 'Maintenance' fee Standard fee Reduced rate fee 'Maintenance' fee Standard fee Reduced rate fee 'Maintenance' fee CURRENT 1, PROPOSED 1, CURRENT PROPOSED Herbal Homoeopathic + Anthroposophic (per PLR) Nil NIL Homoeopathic Registration Manufacturer's Licence Wholesale Dealer's Licence Wholesale Dealer's Licence (reduced rate or GSL) NOTES 1. Payable for first five complete fee periods following the year of grant. Includes Reduced Major Drugs with turnover greater than 200,000 - otherwise treat as POM. 2. Payable for first three complete fee periods following the year of grant. 3. The standard fee for 2002/2003 is payable when the turnover of the drug in the 2001/2002 year exceeded 35,000. If the turnover was 35,000 or less, the reduced fee is payable unless the maintenance fee is applicable. A maintenance fee is payable where the licence holder declares that he does not intend to manufacture or import the product during the licence fee period (1 April March 2003) and, either he has not manufactured or imported the product in the previous fee period, or, the turnover during that period (1 April March 2002) did not exceed 1, To cover products licensed under Section 104 or 105 (of the Medicines Act 1968) Orders. Sj/es/feesMLX2002.doc/20/11/01 Page 7 of 15

8 ANNEX B OTHER PROPOSALS FOR 1 APRIL THE INTRODUCTION OF A SPECIFIC FEE FOR THE RENEWAL OF OUTGOING MUTUAL RECOGNITION APPLICATIONS 1.1 We consulted on this proposal last year with the intention of introducing it in April However, for technical reasons it was not possible to introduce it then, we therefore propose that this new fee be introduced from 1 April Details of the proposals are given again here for reference. 1.2 As you are aware, European Community law provides a mechanism to harmonise Member States national marketing authorisations (MAs) through the Mutual Recognition (MR) procedure. Under this procedure, there are two types of application that can be made: - Incoming MR application - where an MA already exists in one or more Member States (but not in the UK) and the company concerned seeks to have the MA recognised in the UK. In this case, the UK is the Concerned Member State (CMS). The applicant is able to request one of the other Member States to act a Reference Member State (RMS) and information is provided by them to assist the MCA to mutually recognise the application. - Outgoing MR applications the reverse process occurs where a UK MA already exists and a company wishes to seek authorisation in one or more Member States. In this instance, the MCA acts as the RMS and is obliged to devote time and resource in providing information and assessment to the CMS(s). 1.3 The continuing development of the MR procedure needs to be underpinned by effective regulation. The MCA is devoting increasing resources to ensure the continuing success of MR. To do this we need to ensure that we are adequately funded to provide a good quality service to industry and meet our public health and European obligations. A fee was introduced during 2000 for the assessment of outgoing MR applications. We now seek to cover our costs for assessing outgoing renewals in MR applications. We are not seeking additional funding for assessing national renewals or a MR renewal where the UK is a CMS. 1.4 Although the assessment of renewals is covered by the existing periodic fee structure, the assessment of outgoing MR renewals requires further commitment of resources over and above that required to assess a national renewal or a MR renewal where the UK is a CMS. This is a small but growing area of work and it is currently unremunerated. 1.5 The European MR Renewals Guideline, adopted during 2000, applies to all MR renewals with an expiry date after November For the first time, changes to the MA may be introduced at renewal rather than requiring a separate variation. Although this reduces the administrative burden on the company concerned, it does increase the assessment burden on the Agency for which it is not remunerated. The assessment involves time-consuming negotiations with other CMSs to agree a detailed assessment report within 90 days. Set out below is the proposal for fees to cover this work (This was agreed in last year s proposal but not implemented): 1.6 We propose to charge, subject to the provisions below, the same fee as a Type II standard variation, currently 514 (554 proposed), for each application. The outgoing MR renewal applications received so far have required amendments to the Summary of Product Characteristics (SPC) which, if received as a variation, would mostly have been charged as a Type II standard rate. This seems a reasonable comparison. We also propose to supplement this flat-rate fee with: - a 50% discount for bulk applications. A company would be able to benefit from a bulk discount where it had more than one renewal for the same product range falling on the same day, as long Sj/es/feesMLX2002.doc/20/11/01 Page 8 of 15

9 as the products shared the same dosage form, indications and Periodic Safety Update Report (PSUR). The company would pay a full fee for the first application and 50% for each of the others. - A higher fee for the first renewal of a New Active Substance. These renewals, although few in number, are more complex because the safety issues are likely to be more significant. We believe a fee in line with the fee for a Type II Complex variation would be appropriate where the UK is CMS, currently, 6,282 (6,784 proposed). The same bulk rules would apply as for variations, i.e. one complex fee plus a standard MR renewal fee for each member of the bulk. Implementation 1.7 This will apply to outgoing MR renewals with an expiry date of 1 August 2002 or later. This takes account of the 4 months companies have to submit their applications in advance. It would, therefore, come into effect from 1 April NEW CAPITAL FEES FOR RECLASSIFICATION APPLICATIONS BACKGROUND 2.1 Currently, reclassifications are made via applications through a number of routes including Complex Abridged (current fee 18,853), Standard Abridged (current fee 6,913), Simple Abridged (current fee 1,795) or as a standard Type II variation application (current fee 424). WHY WE NEED THE FEE 2.2 The assessment of reclassification applications is a work-intensive process involving not only assessment but the preparation of a CSM paper, consultation, a Medicines Commission paper and Ministerial submission. This work is in addition to that required to assess an application for other purposes and the relevant fees do not adequately remunerate the Agency for the work undertaken. In order to ensure the work involved is adequately and transparently resourced, it is proposed to introduce a reclassification fee. 2.3 As a separate initiative in taking forward work to implement the NHS Plan, the MCA is currently reviewing the way in which reclassification is handled with a view to streamlining the process. This will include separate procedures for dealing with standard and complex reclassifications. In order to ensure that the proposed fee fairly reflects the work involved, two fee levels are proposed. HOW WOULD IT WORK? 2.4 For complex applications a fee of 6,000 is proposed. The amount of work required successfully to complete a more complex reclassification is broadly equivalent to that involved in a national Complex Type II Variation. This fee level will apply to applications involving a first reclassification of a substance from POM to P or P to GSL, any major new indications and cases the MCA considers would have a significant public health implication. 2.5 For standard applications a fee of 3,000 is proposed. This will apply to straightforward proposals for reclassification which would still involve assessment by the MCA and full consultation both with the public and the relevant advisory committee. Sj/es/feesMLX2002.doc/20/11/01 Page 9 of 15

10 2.6 We are currently working closely with interested parties on the revised procedures, the details of which will be the subject of a separate consultation exercise, and an updated guidance note on reclassification procedures. 3. A NEW CATEGORY OF VARIATION FEE, TYPE 0, TO REFLECT THE EUROPEAN VARIATIONS SYSTEM 3.1 The European Commission has initiated the process of amending the Variations Regulations associated with the 2001 Review of European pharmaceutical legislation. However, the revision of these Variations Regulations is independent of any amendments to other pharmaceutical legislation and is likely to be implemented ahead of changes proposed by the 2001 Review. The introduction of amended Variation Regulations is anticipated by the end of One of the proposals for the new Variations legislation is the introduction of a new category of variations, currently known as Type 0 variations, which would allow industry to notify the regulatory authority of changes to a marketing authorisation. It is anticipated that the changes allowed in this category would include administrative changes, certain amendments to specifications and changes to manufacturing sites in particular circumstances. The complete list will be defined in the European legislation. A large proportion of present Type I applications would become Type Certain conditions will be attached to Type 0 changes and applications will need to be accompanied by appropriate documentation, however, there will be no assessment. Even so, Type 0 applications will require validation to ensure that the conditions are met and appropriate documentation has been provided before acceptance of the notification and issuance of an acknowledgement to the MA holder. In addition, the marketing authorisation details will need to be updated appropriately. We will need to cover the cost of the validation and administrative work associated with processing Type 0 notifications. For this reason, we are looking to introduce a "Type 0" variation fee to coincide with the introduction of the fee through EC Regulations. This may happen by 1 st April 2002, although it is more likely that the proposals may not be implemented until later in the 2002/2003 year if this is the case, a separate piece of amending legislation will need to be made later in the year. 3.4 The proposed fee for national variations and incoming MR applications where the UK is a CMS is 130, in line with fees for other administrative variations already charged by the Agency. The proposed fee for outgoing MR applications where the UK is RMS is 203, in keeping with the proportionately higher fees charged for other variations where the UK is RMS. This higher fee recognises the additional work required when the UK acts as RMS in providing information to the CMS. 3.5 Type 0 applications will qualify for bulk discounts in the same way as currently applied to Type I and Type II standard variations. This would be one full fee for the lead application and half fees for each other application within the bulk. 3.6 We will keep you informed of developments including the detail of those variations which will be included in this category. These will, of course, be some of those which are currently classified as Type I variations. 3.7 Equivalent changes will be made to the classification of variations to licences for parallel imports and certificates for homeopathic registrations. Sj/es/feesMLX2002.doc/20/11/01 Page 10 of 15

11 4. A CHANGE IN THE DEFINITION OF COMPLEX ABRIDGED APPLICATIONS TO CORRECT AN ANOMALY IN FEE CHARGING. 4.1 Marketing Authorisation (MA) holders have brought to our attention an apparent anomaly in the fees we charge for MA applications and variations where a manufacturer has an European Certificate of Suitability (ECS). 4.2 Currently, where an application is made for a MA and the manufacturer of the active ingredient is not currently included in any other MA in the UK (or through centralised European MAs), but has an ECS, we classify the application as complex abridged and charge the appropriate fee. However, if a company seeks to vary its (granted) MA to include a manufacturer with an ECS, that variation is categorised as a Type I variation. We have examined the methods of assessment in these cases and concluded that, such MA applications should be classified as Standard Abridged applications rather than Complex Abridged applications, and the appropriate fee levied. 4.3 We propose to introduce this provision from 1 April It cannot be backdated. 5. TECHNICAL CHANGE FOR PUBLISHING LICENCES IN MAIL 5.1 We propose to make a technical amendment to the Medicines for Human Use (Marketing Authorisations Etc.) Regulations 1994 to regularise the new arrangement for publishing new MAs in the Agency s newsletter MAIL which was introduced earlier this year. Sj/es/feesMLX2002.doc/20/11/01 Page 11 of 15

12 DRAFT REGULATORY IMPACT ASSESSMENT : MEDICINES CONTROL AGENCY - FEES 1. TITLE THE MEDICINES FOR HUMAN USE AND MEDICAL DEVICES ( FEES AND MISCELLANEOUS AMENDMENTS) REGULATIONS The Purpose and Intended Effect of the Measure The issue The Medicines Control Agency (MCA) is an Executive Agency of the Department of Health. It acts on behalf of the Ministers comprising the Licensing Authority (as described in the Medicines Act 1968), in the regulation of the parts of the pharmaceutical industry concerned with medicines for human use. The MCA is a Government Trading Fund and, as such, is fully funded by fees paid by the industry in connection with the manufacture, sale and supply of medicines. The fees charged by the MCA are monitored and reviewed annually to ensure, as far as possible, that the fees charged for a particular service, reflect the cost of the work undertaken. This is in line with Treasury guidance. Under the terms of the Trading Funds Acts, the MCA has a financial objective to at least break even taking one year with another and to set fee levels to achieve this, after taking account of HM Treasury's requirement to earn 6% return on capital employed in real terms. Until 1992, MCA received a proportion of funding from central government, but since then, the Agency has been entirely funded through fees. Due to improvements in efficiency and high licence volumes, MCA was able to reduce its fee levels considerably between 1992 and This action has, as planned, enabled the Agency to reduce its operating surplus considerably. However, this means that MCA is now operating well below running costs. Despite the increases in fees since April 1999 and the proposed 8% increase in April 2002, fees will still be lower in real terms than they were in The objective These Regulations amend existing legislation relating to the fees charged to the pharmaceutical industry in connection with the regulation of medicinal products for human use in the United Kingdom. The proposal for 2002/2003 is to increase fees across the board by 8% and make a number of other amendments including: the introduction of a new fee for work relating to the renewal of certain marketing authorisations; a new capital fee for applications for legal reclassification of product; the change in the definition of a complex abridged application to correct an anomaly in fee charging; and a minor technical variation to the Medicines for Human Use (Marketing Authorisations, etc) Regulations The effect of these Regulations will be to increase the fees charged to the pharmaceutical industry in connection with the licensing of medicines for human use by around 8% across the board and introduce two new fees to cover additional work not currently covered by fees. One change will result in lower fees for particular applications and the technical amendment will have no effect whatsoever on the industry in terms of costs. These changes will help to ensure that the MCA's fees reflect more accurately the cost of the work undertaken. Sj/es/feesMLX2002.doc/20/11/01 Page 12 of 15

13 3. Risk Assessment There are no immediate identifiable risks or hazards associated with these regulations although, if the MCA are not adequately resourced for the work they undertake there could be a risk to human health in the long term. 4. Options Two options for the main proposals have been identified: Option 1 - increase the fees across the board to begin to balance out costs/fees, and introduce two new fees for certain applications to cover the cost of work not currently directly funded; Option 2 - make no changes. 5. Issues of equity or fairness Is it fair to charge fees to the industry which do not adequately reflect the cost of inflation and of the work undertaken (i.e. to undercharge or to overcharge)? 6. Benefits Identify the benefits The benefits are to the pharmaceutical industry (relating to human medicines) and to the public health. The industry will benefit from the maintenance of a high level of service from the MCA. The public health will benefit from these measures by ensuring that the MCA is adequately resourced for the work it undertakes in ensuring the safety, quality and efficacy of the medicines placed on the UK market. Quantify and value Option 1 will increase costs in relation to fees, to all parts of the industry by around 8% and will help the MCA to redress the balance between fees and costs over the next few years. However, despite this increase in fees, they will remain lower in real terms than they were in 1992/93. Option 2 would freeze licensing costs at 2001/2002 levels. This would hamper the Agency s ability to maintain its operation. It would create a position where costs would be running above income and will eventually result in a deficit contrary to the requirements of the Agency s Trading Fund status. 7. Compliance Costs for Business, Charities and Voluntary Organisations Business sectors affected All sectors of the pharmaceutical industry involved in the manufacture, sale and wholesale of medicinal products for human use. Compliance costs for a "typical" business It is not possible to identify a "typical" business. Businesses will range from small "one-man-bands" to multi-billion pound international manufacturing businesses. However, whatever the size of the business, costs relating to licensing fees will increase by around 8% through the implementation of these Regulations. There are no recurring or non-recurring costs associated with these Regulations. Sj/es/feesMLX2002.doc/20/11/01 Page 13 of 15

14 Total compliance costs The total cost of compliance is estimated to be around 32m compared to around 30m for 2001/2002 increased compliance costs, therefore of around 2m overall). There are no associated recurring or non-recurring costs - this figure represents the total income expected taking increased costs and expected volumes into account. The MCA's accounts are published annually. 8. Consultation With Small Business : "The Litmus Test" A small business litmus test has not been undertaken although all businesses are being consulted on these measures. However, the overall effect of an increase in annual costs will affect all businesses no matter what their size. For example, a small wholesale dealer dealing in General Sales List products only (probably the smallest business within the whole sector) will pay an annual periodic fee of 100 in 2002/2003 which is 7 greater than in 2001/2002. If he also has an inspection during the coming year (these are carried out on a 4-year cycle), it will cost 427 compared to 395 in 2001/2002. This fee in itself is less than half the cost of a standard inspection to a larger wholesaler's site. For this particular small business, increased costs will amount to 39 over the year if he has an inspection in the coming year - if he does not, his costs will increase by 7. This business would not be affected by the new renewal fee (for outgoing mutual recognition applications) proposed. A second example might be for a small business holding seven product licences of right for homoeopathic products (there is such a company). This company currently has no costs relating to licensing as the annual fee for these licences was discontinued in 1998/99. There will be no liability for this business in 2002/2003 as a result of these proposals. This business would not be affected by the new renewal fee (for outgoing mutual recognition applications) proposed. A third example might be for a small manufacturer holding five marketing authorisations for General Sales List products. Costs for this company would increase overall by 170. This is calculated through taking into account annual periodic fees, and an inspection fee of 754 (increased by 60). In addition, this company might hold a marketing authorisation which has been through the mutual recognition procedure, in this case, if the company renews this particular marketing authorisation inyear, an additional fee of 554 would also be payable (this would only occur every five years). The new fee for application for legal reclassification of products would simplify the current system and introduce two flat rate charges. Currently fees for this service can vary considerably from 18,853 per application to 424 the lower levels of which do not currently cover the cost of the work being undertaken. The new system will introduce two flat rate fees of 6,000 for more complex case and 3,000 for others. Some companies will gain from this process and some will lose. The clarification of the definition of a complex abridged application will mean that some companies currently paying 18,853 will have their fees reduced to 6,913 (2001/2002 rates). In addition, even though fees expenditure represents a relatively small element in the annual outgoings of a small pharmaceutical business, it represents a greater proportion of their outgoings than for larger businesses. The smallest of the businesses in the pharmaceutical industry do not tend to be developmental companies and so costs associated with applications for new products rarely arise. Certain provisions are already present in legislation to assist smaller companies both through reduced fees for certain smaller companies and for extended terms of payment of a number of capital fees. Sj/es/feesMLX2002.doc/20/11/01 Page 14 of 15

15 9. Other Costs There are no other costs occurring as a result of these Regulations. 10. Results of Consultations [Results of the consultation exercise will be inserted when complete. Some 3,500 consultation letters will be issued to all marketing authorisation and licence holders, and other interested parties giving 12 weeks in which to respond. ] Copies of the replies will be made available on request following the end of the consultation period. 11. Summary and Recommendations It is recommended that the amendments to these Regulations take place as this will ensure that costs to the industry better reflect the actual cost of the work undertaken in connection with medicines licensing, and that the MCA will be adequately resourced to meet its performance targets and provide the level of service which the industry has grown to expect. 12. Enforcement, Sanctions, Monitoring and Review MCA fee levels are under ongoing monitoring and review with a view to making annual amendments (where necessary) to ensure that, as far as possible, the cost of the work undertaken by the MCA is reflected in the fees charged to industry. 13. Declaration: I have read the Regulatory Impact Assessment and I am satisfied that the balance between cost and benefit is the right one in the circumstances. Signed by the responsible Minister... Date Contact point Any enquiries about these Regulations should be made, in writing to: Mrs Sue Jones Fees Policy Unit Medicines Control Agency Room Market Towers 1 Nine Elms Lane London SW8 5NQ Tel: Sj/es/feesMLX2002.doc/20/11/01 Page 15 of 15