To all licence holders, blood banks, blood establishments ...the MHRA for the regulation of medicines, including herbal and homeopathic medicines, and blood establishments and blood

To all licence holders, blood banks, blood establishments and representative associations Our Ref: MLX 335 23 November 2006 Dear Sir/Madam MEDICINES AND HEALTHCARE PRODUCTS REGULATORY AGENCY (MHRA) REGULATORY FEES FOR MEDICINAL PRODUCTS (INCLUDING HERBAL AND HOMOEOPATHIC PRODUCTS), BLOOD ESTABLISHMENTS AND HOSPITAL BLOOD BANKS – PROPOSALS FOR 1 APRIL 2007 INTRODUCTION 1. I am writing to consult you on proposals to change the levels of fees charged by the MHRA for the regulation of medicines, including herbal and homeopathic medicines, and blood establishments and blood banks1. A separate consultation is being carried out in respect of medical devices regulatory fees (Reference RCX/004/002/035) which can also be found on our website www.mhra.gov.uk. SUMMARY 2. The key proposals in this consultation are as follows:

• A small number of changes to fee definitions are proposed, in order for the fee structure to remain up to date;

• Consultation views are sought on a proposal to move to a simplified scheme of daily rate fees for inspections. This will not affect 2007/8, but consultees’ views will feed into the design of the scheme, for implementation in April 2008;

1This consultation is in accordance with section 129(6) of the Medicines Act 1968 and will, subject to consultation, lead to the amendment of: The Medicines (Products for Human Use – Fees) Regulations 1995 (S.I. 1995 No 1116 as amended by SI 1996 No 683, SI 1998 No 574, SI 1999 No 566, SI 2000 No592, SI 2000 No3031, SI 2001 No795, SI 2002 No 542, SI 2003 No625, SI 2003 No 2321, SI 2004 No 666, SI 2004 No 1157, and SI 2005 No1124, SI 2005 No 2979 and SI 2006 No.494; also 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. 1996 No 482, S.I 1998 No. 574, S.I. 1999 No. 566, S.I. 2000 No 592, S.I. 2000 No 3031, S.I. 2001 No , S.I. 2002 No 542, S.I. 2003 No 625, S.I. 2003 No 2321, SI 2004 No 666, SI 2005 No 2753 and SI 2006 No.494) 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. 1999 No. 566, S.I. 2000 No, S.I. 2000 No 3031, S.I. 2001 No , S.I. 2002 No 542, S.I. 2003 No 625, S.I. 2003 No 2321, SI 2004 No 666 and SI 2006 No.494). The Blood Safety and Quality Regulations 2005 (SI 2005 No 50, SI 2005 No2898).

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• Proposed changes to existing fee levels vary. In some areas, no increase is proposed, and this includes product licence applications and variations where companies use the electronic standard for applications (eCTD);

• The overall average fee increase, taking all the different fee areas into account, is 4.9 per cent.;

• The proposed fee increases have been designed to support the Agency’s focus, now and in the coming financial year, on improving service levels, in terms of response times for handling applications.

BACKGROUND 3. The MHRA is required, as a Government Trading Fund, to recover the costs of its medicines regulatory functions through fee income. Fee levels are set in Regulations, and are revised on an annual basis, subject to consultation and Parliamentary approval. 4. In the 2005/6 financial year, the Agency’s responsibilities expanded significantly, mainly as a result of new EU legislation which came into force on 30 October 2005. As a result of the new resources that the Agency needed in order to carry out its new responsibilities effectively – and following a year in which all fee levels had been frozen with no increase – fee levels were subject to significant increases in April 2006, averaging 17 per cent. In recognition of this, the Agency’s aim has been to keep fee increases for the coming year to the lowest possible levels. 5. At the same time, however, the last eighteen months have been a time of significant change for the Agency, both because of the new legislation referred to above, and as a result of changes to organisational structures and information systems in the Agency. During the implementation of these changes, there has been an effect on the speed with which the Agency deals with certain licence applications and variations, and we acknowledge that companies will have experienced slower response times than they would expect. While in many areas of the Agency’s business – for instance, inspections and clinical trial authorisations – the Agency is meeting standards and timelines as usual, it is important to the Agency as well as to companies that we should be delivering a prompt and efficient service in all areas. We have a programme of actions to address the bottlenecks causing delays and to tackle backlogs, and have been working very closely with all the pharmaceutical industry trade associations in doing this. 6. Some of the measures we have introduced recently to aid this process include the introduction of a new Regulatory Information Service helpdesk function and the appointment of additional medical writers. These measures take some of the peripheral work from our assessors to enable them to spend more time assessing applications. We are also working closely with industry representatives to support the move to full electronic working in accordance with the international eCTD standard. Progress is being made. For example, Type 1A variations – which faced significant backlogs earlier this year – have now reached the position where all applications are being dealt with within two weeks. 7. We need now to consolidate and build on the improvements we are starting to see and to focus resources and efforts to deal with our core business in order to ensure that we gain the benefits of the changes undertaken, and bring about the improvements in service levels. Our objective is that the fee proposals set out below support and enhance our ability to deliver further improvements.

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MAIN PROPOSAL 8. The Agency is required to assess cost pressures it will face in the coming year, in order to ensure that fee income can fully recover costs. The key element of this is the cost to the Agency of ensuring that it can recruit and retain the staff – in particular expert staff, including assessors – needed to fulfil our responsibilities. There will be pay pressures in the coming year, both from central Government pay agreements, and from the need to keep pace with market salaries for certain experts. In the last year, the Agency has found it increasingly difficult to recruit to medical assessor vacancies in particular, as a result of the increases in doctors’ pay in the NHS and elsewhere. We need to be able to recruit and retain expert staff in key areas of the Agency, as an essential part of maintaining and improving service levels.

9. These pay pressures – taken together with other unavoidable costs such as depreciation costs – have been assessed as amounting to a 4.9 per cent overall increase in fees. Although there are a number of areas of the Agency’s work where there will be other pressures – for instance, further action on tackling counterfeit medicines – the proposed fee increases do not allow for any expansion in these areas of work, unless absorbed by efficiency savings elsewhere. 10. In order to ensure that fees match actual costs as closely as possible, the proposed individual fee increases in each area vary. Some fees are frozen at 2005/6 levels, while for others the proposed increase is higher than 4.9 per cent, in order better to reflect the allocation of resources within the Agency against fee-earning activities. 11. In the product licensing area, a new proposal is made, as part of the wider moves by both industry and the Agency to adopt the new eCTD standard for electronic working. eCTD is a worldwide standard, which will enable full and consistent electronic handling of regulatory business. All EU regulatory authorities are required to accept eCTD applications by 2009, and the MHRA’s new information systems are designed around eCTD and fully ready now. Using eCTD will bring significant benefits to companies, through faster processing of applications. Encouraging and accelerating the move to eCTD is a key shared objective between the pharmaceutical industry associations and the Agency, and an important part of the steps to improve performance. 12. For the coming year, therefore, the proposal is:

• For all product licence applications and variations (other than parallel imports), if the application is fully compliant with the eCTD standard, the fee will be frozen at 2006/7 levels;

• For those that are not compliant with eCTD (whether paper or in other electronic format such as CD-ROMs), the fee levels will increase by 4.9 per cent.

13. The differential fees reflect the fact that more work needs to be done within the Agency with non-eCTD applications (scanning and indexing) than with an eCTD application, which automatically drops into the system. It is also the Agency’s desire that this fee differential will act as an incentive to companies to move to eCTD, alongside the other advice and support that the Agency and industry associations are engaged in. 14. Annex A sets out all of the detailed individual fee proposals, including the differential fees for eCTD applications.

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Better Regulation 15. The Agency is working with industry and other stakeholders to pursue a programme of reforms under the Government’s “Better Regulation” initiative, to ensure that regulatory systems are proportionate, targeted and risk-based. A number of changes are already under way, including:

• Changes agreed in the Better Regulation of Over The Counter Medicines Initiative (BROMI), a partnership between the Agency, the Department of Health, the Cabinet Office, the National Pharmacy Association, the non-proprietary sector and the Proprietary Association of Great Britain (PAGB) to identify ways of simplifying regulatory requirements whilst maintaining public health protection. This initiative has already led to:

• New arrangements for self-certification of changes to leaflets and labels for OTC and prescription medicines in certain circumstances, backed up by an industry Code of Practice;

• Agreement that some Type IA Variations can be carried out through a self-certification system rather than having to wait for the variation to be approved by the Agency, for implementation in early 2007;

• New arrangements for the change of ownership scheme, to streamline processes and cut down on companies having to write off stock;

• Working in Europe to pursue simplification and better regulation, in particular through the Commission’s review of the Variations Regulations likely to take place next year.

• Moving to a risk-based approach to inspections, where inspections are programmed according to defined risk criteria rather than solely by routine time intervals. This has begun in 2006/7 and will be rolled out fully in the coming years.

16. The changes above will be described in more detail in the Department of Health’s Simplification Plan, to be published shortly, along with estimates from industry associations as to the cost savings to industry from burden reductions. 17. Companies will start to see some of these benefits over the coming year, and we will continue to work to identify further changes that, while meeting the Agency’s responsibilities to safeguard health, can simplify or reduce burdens for industry. Daily Rates for Inspection Fees 18. In line with the Better Regulation agenda described above, we are proposing to introduce a scheme of daily rates for inspections in April 2008. The current structure is complicated, with around 35 different individual fees for different types of inspection. These fees are set according to the average amount of time spent by inspectors on such inspections (and associated work), and is fixed regardless of whether the actual time for a given inspection is greater or lesser. 19. Our intention is that these 35 different fees should be replaced by two daily rates (and half-day rates), the two rates reflecting the different grades of inspector for different types of inspections. The benefits of this change would include transparency and simplicity, but – most crucially – it would represent a fairer reflection of the actual costs

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incurred, and would support the better regulation principles of targeted and risk-based inspection. Taken together with the move to a risk-based programme of inspections, the effect would be that companies that are more compliant with requirements would benefit from less frequent inspections, and shorter inspections, and that (in addition to the business benefit of less time devoted to inspection) their inspection fees would also adjust accordingly. 20. The opposite would of course also be true, that less compliant companies might find more frequent inspections and proportionately higher fees to be the result. Another potential downside for companies will be that they will be less able than now to budget with certainty as to what their annual inspection fee costs will be. 21. We believe that these potential downsides are outweighed by the benefits, and are indeed an inevitable part of aligning the incentives to support compliance with requirements. 22. The Agency does not intend overall to increase its inspection fee income as a result of introducing daily rates. We will still need to recover costs fully at the aggregate level, but the change would ensure a fairer distribution of the costs according to resources used. We will be working in the coming year on the detailed design of the scheme, but would very much welcome consultees’ views on whether they support the proposal in principle, and any specific points they would wish to make to help in the design of the scheme. Other proposals for change 23. In addition to the main overall increase in fees, we are proposing a small number of changes to fee definitions. These affect:

• Various types of scientific advice and company meetings • The definition of standard and complex abridged applications • Clinical Trial Authorisation annual fees • Importation of unlicensed medicines • Reclassification variations

Full details of these proposed changes are in Annex B (including detailed proposals for changes to fees for blood banks and blood establishments – see page 23 and 28). Conclusion 24. The last year has been a year of considerable change for the regulatory system and for the Agency, with significant new EU legislation, a strategic development of more proactive pharmacovigilance, and internal change processes within the Agency. These changes are still bedding in. 25. Our priority for the coming year is to gain the full benefits of these changes, both for better protection of health, and for more efficient service, particularly in areas where response times have suffered. These fees proposals will help us do this, by:

• Encouraging a quicker move to eCTD, which will improve efficiency and cut current delays in scanning and indexing applications

• Ensuring that the Agency has sufficient funding to recruit and retain the staff it needs, in assessment and other areas;

• Ensuring that fee levels reflect fairly the costs related to that activity,

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without cross-subsidy; • Targeting the additional income from fee increases to support

performance improvement. COMMENTS 26. Any comments on these proposals should be sent to Karen Salawu, 16th Floor, Market Towers by 5th February 2007 using the reply sheet provided at Annex D, or by e-mail to [email protected] using the subject reference of “Fees consultation MLX 335”. We regret that we cannot take comments over the telephone but you may also send your comments by fax on the following telephone number – 020 7084 2121. Copies of replies will be made available to the public on request unless you clearly state that you are replying “in confidence”. REGULATORY IMPACT ASSESSMENT 27. 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. 28. 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 and will be contacting some smaller companies during the consultation process. If you would like to be included in this exercise, please let Karen Salawu know (contact details in para 26 above). Recurring costs- e.g. extra administration, consumable materials Non-recurring costs- e.g. additional expenditure on computer systems and other capital expenditure. 29. Following the end of the consultation period, copies of the responses can be obtained from Karen Salawu. Yours sincerely Sue Jones Fees Policy

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ANNEX A PROPOSALS FOR MHRA FEES FROM 1 APRIL 2007

CONTENTS Page LICENCE APPLICATIONS: MARKETING AUTHORISATIONS ………………………... 8 PARALLEL IMPORTS …………………………………………. 9 CHANGE OF OWNERSHIP ……………………………………. 9 MANUFACTURER’S LICENCES ……………………………… 9 WHOLESALE DEALERS’ LICENCES ………………………… 9 EXPORT CERTIFICATES ……………………………………………….. 10 CLINICAL TRIALS ……………………………………………………….. 10 DRUG/DEVICE COMBINATION PRODUCTS …………………………. 11 PRE-APPLICATION MEETINGS ………………………………………… 11 PHARMACOVIGILANCE ADVICE MEETINGS ………………………… 12 POST-AUTHORISATION MEETINGS ………………………………….. 12 LICENCE RENEWAL APPLICATIONS ………………………………… 12 RECLASSIFICATION …………………………………………………….. 12 ASSESSMENT OF LABELS AND LEAFLETS ……………………….. 12 VARIATIONS: MARKETING AUTHORISATIONS …………………………….. 13 PARALLEL IMPORTS …………………………………………… 13 MANUFACTURERS’ LICENCES ………………………………. 13 WHOLESALE DEALERS’ LICENCES …………………………. 14 CLINICAL TRIALS AUTHORISATIONS ……………………….. 14 TRADITIONAL HERBAL REGISTRATION SCHEME………….. 14 INSPECTION FEES: MANUFACTURERS ……………………………………………… 15 WHOLESALE DEALERS ………………………………………… 15 PHARMACOVIGILANCE ………………………………………… 16 CLINICAL TRIALS ………………………………………………… 16 CONTRACT LABORATORIES …………………………………… 16 TRADITIONAL HERBAL MEDICINAL PRODUCTS…………….. 16 HOMOEOPATHIC MEDICINAL PRODUCTS……………………. 16 TRADITIONAL HERBAL MEDICINAL PRODUCTS: REGISTRATIONS ………………………………………………… 18 HOMOEOPATHIC MEDICINAL PRODUCTS REGISTRATIONS AND NATIONAL RULES ……………………. 19 VARIATIONS…………………………………………………………. 20 PERIODIC FEES ALL MARKETING AUTHORISATIONS AND LICENCES ……… 21 FEES FOR SAFETY AND QUALITY VETTING OF UNLICENSED IMPORTED MEDICINES …………………………………………………………………. 22 FEES FOR BLOOD BANKS AND OTHER BLOOD ESTABLISHMENTS 23 OTHER PROPOSALS FOR APRIL 2007…………………………………….. 25 DRAFT REGULATORY IMPACT ASSESSMENT ………………………. 29

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Current

fee Proposed

1 April 2007

Proposed 1 April

2007 for fully

compliant eCTD

LICENCE APPLICATIONS

£ £ £

MARKETING AUTHORISATIONS3

MAJOR

National Fee (including Decentralised procedure where UK is CMS and Hybrid applications)

88,893 93,249 88,893

MAJOR (Reduced in exceptional circumstances1 OR Orders under Section 104/105)

28,494 29,890 28,494

OUTGOING MUTUAL RECOGNITION

- 1ST WAVE 37,989 39,850 _ - 2ND WAVE 24,953 26,176 _ INCOMING MUTUAL

RECOGNITION and European reference products

61,959 64,995 61,959

ABRIDGED COMPLEX


24,576 25,780 24,576


- 1st WAVE 9,777 10,256 _ - 2nd WAVE 6,518 6,837 _ INCOMING MUTUAL


17,202 18,045 17,202

ABRIDGED STANDARD


9,011 9,453 9,011


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- 1st WAVE 3,910 4,102 _ - 2nd WAVE 3,259 3,419 _ INCOMING MUTUAL


6,304 6,613 6,304

ABRIDGED SIMPLE National Fee 2,457 2,577 2,457 OUTGOING MUTUAL

RECOGNITION 2,340 2,455 _

OUTGOING MUTUAL RECOGNITION (INFORMED CONSENT)

2,340 2,455 _

- 1st WAVE 2,340 2,455 _ - 2nd WAVE 2,340 2,455 _ Duplicates for all of the

above Outgoing Mutual Recognition applications when undertaken at the same time as the lead application

2,340 2,455 _

Decentralised procedure where UK is RMS

Major 126,982 133,204 126,982 Abridged complex 34,353 36,036 34,353 Abridged standard 12,921 13,554 12,921PARALLEL IMPORT

1,638 1,718 _

CHANGE OF OWNERSHIP (incl.THMPD registrations)

404 424 _

MANUFACTURERS' LICENCES (incl. THMPD and Homoeopathic Medicinal Products))

- STANDARD 2,688 2,688 _ - Non Orthodox

Practitioner (NOP) 156 156 _

- CHANGE OF OWNERSHIP

295 295 _

WHOLESALE DEALERS' LICENCES (incl.THMPD and Homoeopathic Medicinal Products)

- STANDARD 1,542 1,542 _ - REDUCED RATE 2 660 660 _ - CHANGE OF

OWNERSHIP 341 341 _

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EXPORT CERTIFICATES Per set (1 original + 2

copies) 58 58 _

Per set (URGENT) 130 130 _ Extra Copies (3rd

copy +) 29 29 _

CLINICAL TRIALS Phase I Trial 674 707 _ Phase II or Phase III

trial where product being tested is unknown

2,982 3,128 _

Phase II or Phase III trial where product being tested is known

2,485 2,607 _

Phase IV trial Additional protocols Cross-referrals

155

100

140

163

105

147

_

_

_ 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. From 1 May 2005 no fee will be charged when a company applies for a marketing authorisation for a new formulation intended for paediatric use or new indications for treatment of the paediatric population when supported by appropriate new data.

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Current

£ Proposed 1 April 2007

£

DRUG/DEVICE COMBINATION PRODUCTS

Current £

Proposed 1 April 2007

£ In respect of a request by Notified Body to the MHRA to supply an additional assessment report.

DEVICE WHICH INCORPORATES

A known medicinal substance from a source previously used in medicinal products or in medical devices in respect of which MHRA has previously been consulted.

3,948 4,141 781 819

A know medicinal substance from a new source.

9,202 9,653 2,184 2,291

A new active substance. 40,374 42,352 10,024 10,515 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.

PRE APPLICATION MEETINGS

Current £


£ Quality development only 1,118 2,108 Safety development only 1,118 2,108 Quality and safety development 1,486 2,934 Clinical development only 1,486 2,648 Quality and clinical development 1,866 3,474 Safety and clinical development 1,866 3,474 Quality, safety and clinical development 2,235 4,300 Drug/Device Meetings Quality development only New 750 Safety development only New 750 Quality and safety development New 950 Clinical development only New 950 Quality and clinical development New 1300 Safety and clinical development New 1300 Quality, safety and clinical development New 1650 COMPANY DISCUSSION MEETINGS New 4335

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PHARMACOVIGILANCE ADVICE MEETINGS Standard meeting 1,486 2,934 Major meeting 1,866 3,474 POST-AUTHORISATION REGULATORY ADVICE MEETINGS

1,486 2,648

ADVERTISING ADVICE 1,486 2,108 ADVICE ON LABELS AND LEAFLETS 1,118 2,108

LICENCE RENEWAL APPLICATIONS Current


MANUFACTURERS' LICENCES

NOP 152 152


FIRST RENEWAL OF A MAJOR APPLICATION1

8,847 9,281

ALL OTHERS2 722 757

RECLASSIFICATION COMPLEX 3 – Additional

for MA or PI application with reclassification element

7,824 8,207

- Reclassification variation application

7,824 8,207

STANDARD4 – Additional fee for MA or PI application with reclassification element

3,912 4,104

- Reclassification variation application

3,912 4,104

Reclassification variation application (MA) (analogous product)4

594 738

Reclassification variation application (PI) (analogous product)

170 178

ASSESSMENT OF LABELS & LEAFLETS

SINGLE OR FIRST APPLICATION5

473 496

PARALLEL IMPORTS 300 315 Notes: 1. If a number of such renewal applications are made at the same time and in relation to products with the same active ingredient, dosage form, indications, Periodic Safety Update Report (PSUR) and renewal date, the full fee is charged for the first application, but a fee of £722 will be payable in respect of each of the other applications. 2. If a number of such renewal applications are made at the same time and in relation to products with the same active ingredient, dosage form, indications, PSUR and renewal date, the full fee is charged for the first application, but a 50% “discount” applies to each other application.

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3. A reclassification application is complex where it requires consideration by a medicines advisory committee; the 50% reduction for standard applications applies where the Agency are of the view that no such consideration is required. 4. If multiple MA applications with reclassification elements are made at the same time and in relation to products with the same active ingredient, the full additional fee is charged for one application but only £738 for each other application.

If multiple reclassification variations applications are made at the same time and in relation to products with the same active ingredient, the full fee is charged for the one application but in relation to each other application the fee is only £738 , in the case of other complex/standard applications, or £369 in the case of other applications where there is analogous product already with the same legal status. 5. For all label and leaflet applications, a bulk “discount” applies where a number of simultaneous applications are made for identical changes covering a range of strengths of the same dosage form. The first application is charged at the full rate shown and second and subsequent applications are charged at 50%

LICENCE VARIATIONS APPLICATIONS1 & 4

Current £


£

Proposed 1 April 2007 for

fully compliant

eCTD MARKETING AUTHORISATION * All fully compliant eCTD applications remain at “Current” rate for 2006/2007

Type IA National/CMS 170 178 170Type IA RMS 264 276 264Type IB National/CMS 266 280 266Type IB RMS 526 552 526Type II National/CMS 704 738 704Type II RMS 852 894 852Type II Complex National/CMS 7,964 8,354 7,964Type II Complex RMS 13,808 14,484 13,808Extended Type II Complex

National/CMS 24,576 25,780 24,576

Extended Type II Complex

RMS 34,353 36,036 34,353

PL(PI) STANDARD 326 342 _ ADMINISTRATIVE 158 166 _ MANUFACTURERS’ LICENCES (incl.THMPD)

STANDARD 440 440 _ ADMINISTRATIVE 220 220 _ NOP 220 220 _

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WHOLESALE DEALERS’ LICENCES (incl. THMPD)

STANDARD 416 416 _ ADMINISTRATIVE 220 220 _ CLINICAL TRIAL AUTHORISATIONS

AMENDMENTS TO: ONE PART OF DOSSIER

110 115 _

TWO PARTS OF DOSSIER

220 231 _

THREE PARTS OF DOSSIER

330 346 _

TRADITIONAL HERBAL REGISTRATION SCHEME

TECHNICAL: Standard 224 234 _ Complex 590 618 _ New excipient 6,672 6,998 _

ADMINISTRATIVE 142 148 _ Notes: 1. For all variation applications a bulk “discount” applies where a number of simultaneous applications are made for identical variations. In general, the first of those applications is charged at the full rate shown above and second and subsequent applications are charged at 50%. But, where the first application is a Type II Complex or an extended Type II complex, the second and subsequent applications are charged at the rate for Type II. 2. MA variations fees above apply to Reduced Major applications except where they seek to extend the range of the drug's use outside a limited use area within 5 years of the date of grant of the MA. In this case, in addition to the variation fee applicable, there will be a further fee equal to the difference between the fee paid at the time of the new application and the fee applicable to a full Major Application. 3. From 1 May 2005 there will be no fee when a company applies to vary a marketing authorisation to add one or more indications for paediatric use or to modify of the existing adult dosage.

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INSPECTION FEES

INSPECTION FEES (including intermediate biological sites and Manufacturers of Investigational Medicinal Products) 1

Current


£

STERILE SITE incl. Active Pharmaceutical Ingredients Manufacturer(API)5

SUPERSITE 22,740 23,854MAJOR 12,539 13,153STANDARD 8,010 8,402

MINOR 3,928 4,120NON STERILE AND SITES USED FOR STERILISATION ONLY incl. Active Pharmaceutical Ingredients Manufacturer(API)


MINOR 3,618 3,795ASSEMBLY ONLY


MINOR 1,563 1,640WHOLESALE DEALER and IMPORTERS OF UNLICENSED MEDICINES AND MANUFACTURERS LICENCE (IMPORTS) HOLDERS

STANDARD 1,563 1,640 REDUCED RATE 2 712 747

WHOLESALE DEALER (GSL)

712 747

NOP 2 SITE 240 252NON-ROUTINE GMP INSPECTIONS

UP TO 1 DAY’S DURATION3

2,243 2,353

2 – 3 DAYS 5,856 6,143

3 DAYS + 10,914 11,449

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PHARMACOVIGILANCE INSPECTIONS4

CATEGORY 1 5,057 6,068CATEGORY 2 7,225 8,670 CATEGORY 3 14,450 17,340

CLINICAL TRIALS 6 More than 25 points 21,418 25,702 More than 15 and less than

26 points 14,279 17,135

More than 9 and less than 16 points

7,139 8,567

Less than 10 4,284 5,141CONTRACT LABS7 1 category of activity 2,856 2,996 2 categories of activity 4,284 4,494 3 or more categories of

activity 5,712 5,992

TRADITIONAL HERBAL MEDICINAL PRODUCTS

Inspection of Manufacturers: Full day8

Half day9

1,300

800 1,364

839

Inspection of wholesale dealer: Full day Half day

1,100

600 1,154

629

HOMOEOPATHIC MEDICINAL PRODUCTS

Inspection MAJOR 8,010 8,402 STANDARD 6,645 6,971 MINOR 3,879 3,795ASSEMBLY ONLY MAJOR 5,761 6,043 STANDARD 3,879 4,069 MINOR 1,563 1,640WHOLESALE DEALER STANDARD 1,563 1,640 REDUCED RATE 712 747WHOLESALE DEALER (GSL) 712 747

Notes 1. 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. 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. The one-day fee will only be applied if the inspector spends more than two hours on site. 4. Category 1 - MA holder has less than 5 MAs; Category 2 – MA holder has between 5 and 49 MAs; Category 3 – MA holder has 50 or more MAs. 5. API manufacturer means a person, other than the holder of a manufacturer’s licence, engaged in the manufacture or assembly of active substances used as starting materials in the manufacture of medicinal products 6. Clinical Trial inspections are based on the total points allocated for each category of activity accessed at a site. Categories are as follows:

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Category of GCP activity Points Archiving 1

Project management 3 Quality system 2

Essential documents 3 Contracts and agreements 2

Training 2 Computer systems 3 Data management 3

Statistics 2 Regulatory affairs 1

Investigational medicinal product management 2 Monitoring 3

Pharmacovigilance 2 Reporting 1

7. Activities carried out by contract laboratories include: - physico-chemical analysis - micrbiological analysis including sterility testing - LAL endotoxin testing - Rabbit pryogen testing

Fees are directly payable by contract laboratories. For labs which have already been inspected under the Good Laboratory Practice (GLP) procedures, there will be a reduction in the fee in order to avoid double charging. The fees in that case would be: £750 for a laboratory carrying out 1 category of activity; £1,875 for 2 categories; and £3,000 for 3 or more categories of activities.

8. More than 3 hours spent on site but not more than one day 9. Not more than 3 hours spent on site

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OTHER FEES FOR TRADITIONAL HERBAL MEDICINAL PRODUCTS (THMP) (not included elsewhere*): CHANGES PROPOSED FOR 1 APRIL 2007

TRADITIONAL HERBAL REGISTRATION SCHEME

Current Proposed 1 April 2007

STANDARD -3 or fewer existing herbal active ingredients -more than 3 existing herbal active ingredients

£2,250 £3,375

2,360 3,540

REDUCED:

Category I -3 or fewer existing herbal active ingredients -more than 3 existing herbal active ingredients

£500 £750

525 787

Category II -3 or fewer existing herbal active ingredients -more than 3 existing herbal active ingredients

£750 £1,125

787 1,180

COMPLEX - single new herbal active ingredient - 2 or more new herbal active ingredients

£4,500 £6,750

4,720 7,081

SUPPLEMENTARY FEES:

Ancillary vitamins/minerals:

Existing Sources plus CEP £1,000 1,049

New sources (non-CEP) £2,000 2,098

New excipients £6,672 6,999

New sources TSE risk excipients (non-CEP)

£590 622

Sterile products £2000 2,098

*For further fees relating to THMPD, see sections relating to Manufacturers’ licences and Wholesale dealers’ licences, variations, change of ownership and periodic fees.

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OTHER FEES FOR HOMEOPATHIC MEDICINAL PRODUCTS (not included elsewhere): HOMOEOPATHIC NATIONAL RULES SCHEME AND REVIEW OF PRODUCT LICENCES OF RIGHT (PLRS)1 - FEES The U.K. introduced a new National Rules Scheme for homoeopathic medicinal products under Article 16.2 of Directive 2001/83. which started on 1st September 2006. Products are required to meet particular standards on safety, quality and patient information.

HOMOEOPATHIC NATIONAL RULES SCHEME £

5 or fewer More than stocks 5 stocks Current Proposed Current Proposed STANDARD 1010 1060 1219 1278 REDUCED: Stock already assessed 752 788 942 988 Formulation 752 788 942 988 Both stock and formulation already assessed 480 503 680 713 SUPPLEMENTARY FEES Current

£ Proposed

New method of sterilisation ( non- pharmacopoeial)

2000

2098

New excipients 6672 6998 New sources TSE risk actives/excipients (non-CEP)

590 618

SIMPLIFIED HOMOEOPATHIC REGISTRATION SCHEME

Current £

Proposed 1 April 2007 £

5 or fewer stock

More than 5 stock

5 or fewer stock

More than 5 stock

STANDARD 734 960 770 1,007REDUCED: Stock already assessed 444 654 466 686Formulation already assessed 444 654 466 686Both stock and formulation already assessed

148 365 155 383

SIMPLIFIED HOMOEOPATHIC REGISTRATION SCHEME MUTUAL RECOGNITION PROCEDURES Mutual recognition OUTGOING Current Proposed Current Proposed 5 or fewer stocks More than 5 stocks £ 266 £279 £ 348 £365

1 'Product Licences of Right (PLRs) are licences that were issued to all products on the market at the time that the Medicines Act 1968 was implemented (in 1971). Homoeopathic products covered by PLRs may have indications'

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Mutual recognition INCOMING 5 or fewer stocks More than 5 stocks £ 465 £488 £ 608 £622

HOMOEOPATHIC VARIATIONS

Homoeopathic Simplified Scheme

New technical 226 237

Other 114 120 Homoeopathic National Rules Scheme

New technical 218 237

Indication 350 367 Other 110 120

Note: For variations to homoeopathic medicinal products authorised under the National Rules Scheme, a bulk “discount” applies where a number of simultaneous applications are made for identical variations. In general, the first of those applications is charged at the full rate shown above and the second and subsequent applications, up to 30 variations, are charged at 50%. Subsequent simultaneous applications for identical variations are charged at 25% of the full rate shown. Fees relating to Homoeopathic Manufacturers’ licences and Wholesale Dealers’ licences applications and annual periodic fees see tables elsewhere.

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PROPOSED PERIODIC FEES FROM 1 APRIL 2007 - PER LICENCE PER PERIOD

TYPE OF LICENCE Current £

PROPOSED 1 APRIL 2007

£ New Active Substance 1 17,278 18,573

Derivatives with a different Route of Administration 1

Or Complex Abridged 2

7,114 7,648

Other derivatives 1 4,803 5,163

Legal Status/Sale Category

FEE TYPE – see note 3

Current £


£ POM Standard fee

Reduced rate fee 'Maintenance' fee

1,780 888 289

1,913 955 310

P Standard fee Reduced rate fee 'Maintenance' fee

779 390 144

837 419 155

GSL Standard fee Reduced rate fee 'Maintenance' fee

322 160

70

346 172

75 NONE4 Standard fee

Reduced rate fee 'Maintenance' fee

395 195

83

425 210

89

TYPE OF LICENCE Current £


£ Herbal 88 95 Homoeopathic + Anthroposophic PLR’s (per PLR) 68 68a Simplified Homoeopathic Registration 18 19 National Rules Homoeopathic Authorisation 68 68a Manufacturer’s Licence 356 383b Wholesale Dealer’s Licence 219 235 Wholesale Dealer’s Licence (reduced rate or GSL) 131 141 Clinical Trials Authorisations 234 252 THMPD Registration 75 80

a Fee set at £68 following consultation and introduction of Homoeopathic National Rules Scheme in September 2006 – Fee will remain unchanged b See also table below for additional fees for importers of unlicensed medicines 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 2007/2008 is payable when the turnover of the drug in the calendar year 2006 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 2007 - 31 March 2008) and, either he has not manufactured or imported the product in the previous fee period, or, the turnover during that period (1 April 2006 - 31 March 2007) did not exceed £1,000. 4. To cover products licensed under Section 104 or 105 (of the Medicines Act 1968) Order.

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FEES FOR SAFETY AND QUALITY VETTING OF UNLICENSED IMPORTED MEDICINES

Number of products imported in previous year

Supplement paid in addition to inspection fee Current £ (to be discontinued)

Proposed from 1st April 2007 Number of notifications estimated for coming year

Additional sum to be paid with annual periodic fee for Manufacturers Licence holders £

1 – 4 290 0 - 100 100 5 – 20 1,444 101 – 1,000 500 21 – 99 4,336 1,001 – 10,000 5,000 100 – 499 8,024 10,001 – 25,000 17,000 500 and over 15,390 25,001 – 50,000 37,000 50,001 – 100,000 75,000 100,001 – 150,000 125,000 150,001 – 200,000 175,000 200,001 and over 250,000

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FEES FOR BLOOD BANKS AND OTHER BLOOD ESTABLISHMENTS Fees for MHRA activities relating to blood banks and blood establishments were introduced in October 2005 and were set to match similar established MHRA fees for the same kind of work. MHRA fees were increased in April 2006 but the blood bank/establishment fees remained unchanged. Following a rigorous costing exercise, MHRA’s inspection fees for other areas were increased significantly in April 2006 to fully reflect the cost of the work involved. In order to now match the MHRA fees for other inspections of the same type most inspection fees for blood banks and establishments will be increasing to match those in other areas. This means that some of these fees are increased by significantly more than the headline figure of 4.9% Institutions and services provided

Current Fee (£)

Proposed April 2007

Blood establishments Application for authorisation 2,444 2,688 Substantial change to authorisation 400 449 Periodic fee 304 387 Regular inspection – major site 8,729 13,153 Regular inspection – standard site 5,557 8,402 Regular inspection – minor site 2,698 4,120 Non- regular inspection – inspector on site >2 hours, but NMT 1 day

1,518 2,353

Non- regular inspection – inspector on site >1 day, but <3 days

4,048 6,143

Non- regular inspection – inspector on site 3 days or more

7,590 11,449

Annual haemovigilance fee (in respect of cost to MHRA of the operation of a system for receiving and assessing reports of serious adverse events and reactions)

375 432

Institutions and services provided

Fee (£)

Hospital blood banks and facilities2 Non- regular inspection – inspector on site >2 hours, but not more than 1 day

759 1,126

Non- regular inspection – inspector on site >1 day, but <3 days

2,024 3,071

Non- regular inspection – inspector on site 3 days or more

3,795 5,724

Annual haemovigilance fee (in respect of cost to MHRA of the operation of a system for receiving and assessing reports of serious adverse events and reactions)3

375 432

2 “Facility” is defined in SI 2006/2013 as: “a hospital, any other facility or service owned or managed by a health service body, a care home, an independent clinic, a manufacturer, or a biomedical research institute.” 3SI 2006/2013 exempts from payment of the annual haemovigilance fee a facility that has entered into an arrangement with a hospital blood bank for that hospital blood bank to report serious adverse events or reactions on the facility’s behalf.

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Annual compliance fee ( in respect of the receipt and assessment of annual compliance reports submitted by hospital blood banks to MHRA)4

400 600

Contract laboratories (that test blood or blood components on behalf of blood establishments or hospital blood banks)

Inspection – laboratory carrying out 1 type of analytical work6

2,0005 2,996

Inspection – laboratory carrying out 2 types of analytical work7

3,0006 4,494

Inspection – laboratory carrying out 37 types of analytical work9

4,0008 5,992

4The annual compliance fee is only payable by hospital blood banks, not by facilities. 5 Reduced to £750 where inspection takes place at same time as an inspection by the GLP MA. 6 Reduced to £1875 where inspection takes place at same time as an inspection by the GLP MA. 7 The 3 types of analytical work are: physico-chemical analysis, microbiological analysis including sterility testing and biological analysis. 8 Reduced to £3000 where inspection takes place at same time as an inspection by the GLP MA.

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ANNEX B OTHER PROPOSALS FOR APRIL 2007

1. Introduction of a new fee for drug/device advice meetings - Directive 93/42/EC on medical devices sets out approval procedures for manufacturers and Notified Bodies (designated organisations that verify the suitability of certain devices for CE marking). In the case of medical devices which incorporate an ancillary medicinal substance the Notified Body is required to consult with a medicines authority on aspects relating to the medicinal substance. Any EC medicines authority may be consulted. Prior to submission of consultation applications, device manufacturers and/or Notified Bodies occasionally request meetings with MHRA in order to clarify data requirements, in particular in relation to clinical data. The consultation applications have always attracted a capital fee but pre-submission meetings for scientific advice have not. Whilst the volume of meetings is very low at the moment, only a handful each year, it may increase in coming years. In order to be consistent with other types of scientific advice meetings (for which charges are made) and to recover the Agency’s costs, we propose to introduce a fee to cover the cost of providing this service. We propose to introduce capital fees of £965 for Clinical advice meetings and £1,315 for Clinical and Quality advice meetings. These figures are based on estimates of time spent by different grades of staff and are proposed to cover both the current costs and to facilitate the provision of resource for this work. 2. New fees for safety and quality vetting of unlicensed imported medicines – An unlicensed relevant medicinal product may only be supplied in accordance with the provisions of Schedule 1 to the Marketing Regulations. Schedule 1 exempts, under defined conditions a relevant medicinal product from the need for a marketing authorisation when it is supplied to fulfil the special needs of an individual patient. Where there is a licensed pharmaceutical equivalent on the market and available for use then an unlicensed product should only be supplied to third parties if the licensed equivalent is not suitable for the patient. The Medicines for Human Use (Manufacturing, Wholesale Dealing and Miscellaneous Amendments) Regulations 2005 [SI 2005/2789] impose a statutory requirement to comply with conditions on the sale or supply of unlicensed relevant medicinal products for human use imported into the UK. Distribution by way of wholesale dealing must be by licensed wholesale dealers. Persons who import products from a licensed manufacturer in another member state of the European Economic Area (EEA), i.e. the EC plus Norway, Iceland and Liechtenstein, must hold a Wholesale Dealer’s Licence. Persons importing a product from outside the EEA must hold a Manufacturer’s Licence which specifies that it covers imported unlicensed relevant medicinal products. An importer must give written notification to the MHRA in advance of each occasion he intends to import unlicensed medicines. On receipt of a written notification, the licensing authority will acknowledge in writing that they have received the notice. The licence holder may proceed with the importation of the product unless he has been informed by the licensing authority within 28 days of date of the acknowledgement letter that it objects to the importation. Reasons for this may include the availability of an equivalent licensed medicinal product suitable for the patient on the market in the UK or safety or quality concerns. Currently the MHRA does not fully recover the cost of the work involved in assessing notifications of this kind. In April 2003 the fees for inspection of holders of wholesale dealer import licences were amended so that some of the costs of the additional

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workload associated with the importation of unlicensed medicines could be recovered through the inspection process. A scale of inspection fees based on the number of different products imported in the 12 months preceding the inspection was introduced. The volume of product that may be imported on any one occasion is restricted. Each notification refers to a single product and no more than 25 single doses or 25 courses of treatment not exceeding three months can be imported on any one occasion. The volume of these applications has risen considerably in the last year or so and the cost of vetting import notifications has been calculated at an amount that is significantly above the current recovery of costs for this work. It is proposed, therefore, that the costs be recovered through a banding structure that will be added to the annual service fee for the companies involved in this sector of the business (see table on page 22 ) We are committed to ensuring that the fees are targeted properly and recover the cost of the work. The proposals for 2007/8 are likely still not to fully cover the Agency’s costs. In the coming year we will assess the ongoing full costs to be recovered from future fees, but will also review the processes and systems in this area in the coming year with a view to making efficiencies where possible. 3. New fees for company discussion meetings - MHRA has, for many years, provided scientific and regulatory advice to sponsors. In July 2003, the system was formalised and although we restrict them to answering specific questions, overall development plans can be discussed, as well as issues to do with individual trials or phases of development. In particular, when companies request follow-up meetings, the progress of development, and necessary next steps, can be considered. The formal system has some benefits, but also some limitations. As an initiative of the MISG Long Term Leadership Strategy Regulatory Workstream (a joint initiative with the ABPI), we now propose to offer meetings between MHRA and sponsors (or groups of sponsors) on less specific topics and on topics where no definitive answers may be possible. The term ‘Discussion Meeting’ will be more appropriate for these; they are being defined as “Meetings to discuss fundamental and broad scientific issues relating to product development that cannot be addressed by a simple question/answer approach”. Examples of what they might discuss include: general approaches to product development, overall product development plans where there are very broad issues that may go beyond what can be discussed at a routine scientific advice meeting, complex issues of drug–device combination products, choice (including relative pros and cons) of study endpoints in particular indications, practical issues of study design, management and analysis, risk-management plans and other post-licensing aspects, etc. The definition of scientific advice meeting in the Fees Regulation will need amendment, and a specific fee for this type of work will be introduced. The estimated cost of such meetings is £4,335 each, taking into account the average hourly pay rates for staff of specific grades who would be needed to attend. The fee will therefore be set at £4335 per meeting. In order not to divert expert staff from the priority work of assessing applications, the Agency expects, in the first year, to hold no more than one of these types of meetings, per month. Following this, an assessment of the likely company demand for such meetings can be made. 4. Amendment to the definition of pharmacovigilance advice in relation to company meetings - Article 6 of Regulation (EC) No 726/2004 and Article 8 of Directive 2001/83/EC, which came into force during November and October 2005 respectively, lay down the particulars and documents to be included in an application for the authorisation of a medicinal product for human use. Article 8(3)(ia) of Directive 2001/83/EC specifies the inclusion of “a detailed description of the pharmacovigilance and, where appropriate, of the risk management system which

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the applicant will introduce.” Under the Medicines for Human Use and Medical Devices (Fees Amendments) Regulations 2004, 'pharmacovigilance advice' is defined as advice in respect of:

a) a MAH's obligations under Title IX of the 2001 Directive; or b) a post-authorisation safety study protocol.

Whilst Title IX (Article 103), which refers to post-authorisation safety studies, could, if construed widely, cover risk management plans, there may be an argument that they are distinct. To avoid any such doubt, it is proposed that the Fees Regulations are amended to specifically capture meetings to advise on RMP. We therefore propose that the definition of “pharmacovigilance advice” in the Fees Regulations is extended to include RMP as an additional category. 5. Amendment to the definition of a complex Marketing Authorisation (MA) application – The existing definitions of a “complex application” given in the Fees Regulations do not extend to all types of MA application requiring substantial additional professional assessment where the active ingredient is not a new active ingredient. Those particular types of applications for a MA not currently included are:

• Applications for which the sole or primary evidence of safety and efficacy is submitted in the form of bibliographic (published scientific paper) evidence;

• Applications which are for ‘line extensions’ (extension applications) involving changes to the active substance, its bioavailability, rate of release, potency or pharmaceutical form and which cannot be achieved by variation of an existing Marketing Authorisation;

• Applications which are not abridged applications involving active ingredients which are not new active ingredients but which include the results of pre-clinical tests and/or clinical trials.

Unless those same types of application also meet one or more of the other definitions of a ‘complex application’ then a standard capital fee is payable currently resulting in significant under-recovery of professional assessment costs. It is proposed to amend the definition of complex applications to include these types of application. 6. Amendment to Periodic Fees for Clinical Trial Authorisations (CTA) – We propose to amend the regulations so that a periodic fee is payable for every CTA held rather than just for each product for which CTAs are held as currently. The reasons behind the current system of a single annual fee for multiple CTAs was based on the effort needed to assess the information. The annual fee was expected to cover pharmacovigilance which would only cover a single product and administration related to the annual safety report which again was expected to be a single report per product rather than for each trial. However, since then the EU Guidance addressing this area has specified that there should be a separate annual safety report per trial, with a concomitant increase in resource required to assess them. The proposal is therefore that the Fees Regulations are changed to require an annual fee per CTA. 7. Amendment to Fee for a Reclassification Variation Analogous Product When this fee was introduced, it was set at the same rate as the fee for a national Type II variation. However, due to administrative oversight it has not been increased in line with the changes to the national Type II variation fee. It is now proposed therefore that this is corrected, and the fee levels aligned in order to ensure full cost recovery.

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8. Fees for blood establishments – We propose to increase the fees for blood establishments that were introduced in October 2005 to align them with other MHRA fees. The MHRA took over responsibility for inspecting the blood establishments in October 2005. At this stage, fee levels were set to match those charged by the Agency for the equivalent work in other areas. Rather than revise the fees again for April 2006, it was decided to leave the fees at their current levels, even though this meant that the Agency was under-recovering against its costs in this area. In bringing the fees to a level that recovers costs fully for April 2007, some fees in this area will be increased by significant levels, notably for inspections. In the case of hospital blood banks, the Agency has adopted a risk-based approach to inspections, whereby inspections are targeted according to assessed risk, based on the information supplied to the Agency through the reporting system. Inspections will not be made annually, therefore the additional cost will not be an annual cost to the organizations but will affect hospital blood banks at the stage when they are selected for inspection.

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ANNEX C

DRAFT REGULATORY IMPACT ASSESSMENT

1. TITLE THE MEDICINES, MEDICAL DEVICES AND BLOOD SAFETY AND QUALITY (FEES AND MISCELLANEOUS AMENDMENTS) REGULATIONS 2007 2. The Purpose and Intended Effect of the Measure Background 2.1 The Medicines and Healthcare products Regulatory Agency (MHRA) 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 as amended a), in the regulation of the parts of the pharmaceutical industry concerned with medicines for human use. 2.2 The MHRA is a Government Trading Fund and, as such, is fully funded for its medicines regulatory function by fees in connection with the manufacture, sale and supply of medicines. The fees charged by the MHRA 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 on Fees and Charges. Under the terms of the Trading Funds Acts, the MHRA 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 3.5% return on capital employed in real terms. Objectives 2.3 These Regulations amend existing legislation relating to the fees charged by the MHRA in connection with the regulation of medicinal products for human use and medical devices in the United Kingdom. (Medical devices are affected by these proposals only in respect of consultations for drug/device combinations. A separate RIA has been prepared for medical devices regulatory fees.) These Regulations also amend existing legislation in connection with the regulation of blood banks and other blood establishments. The proposal for 2007/2008 is to achieve full cost recovery of the work undertaken. 2.4 The Agency also intends that, through the implementation of these fee proposals, it will support its broader objectives and priorities, including: a Relevant amendments have been made by the Veterinary Medicines Regulations 2006 (S.I 2006/2497). "The Ministers" are the Secretary of State for Health and the Northern Ireland Department of Heath, Social services and Public Safety.

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Ensuring that the Agency is adequately funded to fulfil its responsibilities for public health protection;

Improving efficiency and promptness in the handling of licence applications and variations, including through incentivising companies to move to the international standard for electronic working (eCTD);

Ensuring that the Agency has sufficient funding to recruit and retain the staff it needs, in licence assessment and other areas;

Ensuring that fee levels reflect fairly the costs related to that activity, without cross-subsidy;

Targeting the additional income from fee increases to support performance improvement in those areas where the Agency and the industry wish to see improvement.

Rationale for Government intervention 2.5 The need for a statutory system for regulating medicines and other healthcare products is well accepted by all parties, and reflects the position followed in all developed countries. The rationale for this is not only to protect the public from unsafe, ineffective or poor quality medicines (although this is the primary purpose of the regulatory system), but also to enable and support a successful industry sector able to develop and market products that can benefit health. In the absence of a regulatory system, the lack of public confidence – and the lack of a level playing field - would hamper companies’ ability to do this. The fee proposals in these Regulations are designed so as to ensure that the MHRA can effectively carry out its responsibilities to safeguard health, through charging fees that provide the resources for its work. 2.6 Ultimately, if the MHRA were to be insufficiently resourced to carry out its responsibilities, the Agency could be unable to fulfil its obligations in relation to the protection of public health through medicines. The Agency, as a Trading Fund (TF), would be unable to sustain its financial position. Staff numbers would have to be cut to be able to break even taking one year with another as required by the TF Order. If the MHRA is not adequately resourced for the work it undertakes there could be a risk to human health in the long term. This could occur through delays in assessing the safety, quality and efficacy of a critical medicine which could delay the product getting to the market and thus lives could be lost. There could be delays in handling reports of defective medicines or adverse reaction alerts which, if the information is not disseminated quickly enough, could allow medicines known to present risk of harm to patients to continue to be used. This would undermine the core purpose of the regulatory system to protect public health, and lead to harm and unnecessary deaths. 2.7 It is therefore important that the MHRA is able to gain sufficient income from fees to resource these functions effectively. However, it is also recognised that the Agency must carry out its responsibilities efficiently and in accordance with the Government’s principles on Better Regulation, so that regulation is proportionate, targeted and risk-based. The Agency also has a role in supporting innovation and enabling businesses to prosper, through handling routine regulatory processes promptly and efficiently. Unnecessary delay in regulatory activity can be costly to companies in terms of delayed product launches, lost revenues from new or revised products, and planning blight from unpredictable timetables.

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2.8 The rationale behind these fee proposals is therefore to ensure a fee regime that enables the Agency to fulfil its role in safeguarding public health; and also uses the resources from fee income to target improvement in key areas of the Agency’s business. 3. Consultation 3.1 These proposals have the approval of HM Treasury, and of Department of Health Ministers, who are responsible for the work of the MHRA. Informal consultations have taken place with representatives of the affected industries as the proposals were developed. 3.2 A public consultation will take place between November 2006 and February 2007. [The remainder of this part of the RIA will be completed when consultation has been undertaken]. 4. Options 4.1 Three options for the main proposals have been identified: Option 1 - increase fees as proposed to cover costs. Option 2 - make no changes. Option 3 - increase fees by an inflationary figure across-the-board. 4.2 Option 1 will ensure that the correct fee is charged to cover the cost of each area of work undertaken. Some fees are increasing, some are remaining the same. The new fees being introduced will ensure that adequate resources can be given to undertaking functions to protect public health. Overall, the increase and the new fees will ensure continuing targeting of costs and that the Agency is remunerated adequately for the work it undertakes. It will also help to ensure adequate resources and thus better service can be provided. 4.3 Option 2 would freeze licensing costs at 2006/2007 levels (with some fee being frozen at 2004/2005 levels). This would hamper the Agency’s ability to maintain its operation. It would create a position where costs would be running at a level above income and would result in a deficit contrary to the requirements of the Agency’s Trading Fund status. If the Agency were not resourced adequately there could be a long-term risk to public health. There would also be a direct impact on companies in terms of the speed and efficiency with which work – such as licence applications, or variations – were dealt with. This in turn has a direct effect on the costs and earnings of pharmaceutical companies. 4.4 Option 3 would not meet the need to fully resource the Agency to carry out its work. This would have a significant impact both on the Agency’s ability to deal promptly with applications from companies, and on wider public health protection functions such as monitoring and responding to safety concerns about drugs in use. Neither would it adequately target fees to the actual costs incurred and would mean that the Agency’s costs and fees were out of line. This would create inequity for companies and other bodies (including NHS bodies) paying fees, as there would be cross-subsidy between different activities. This is a concern which industry has

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expressed in the past, and cross-subsidy also contravenes the Agency’s duties under the Trading Fund Act. 5. Costs and Benefits Sectors and groups affected 5.1 All sectors of the pharmaceutical industry (including herbal and homeopathic sectors) involved in the manufacture, sale and wholesale of medicinal products for human use (around 3,000 organisations and companies in all). These Regulations also affect academia where medical research and clinical trials are carried out, and NHS organisations that manufacture products. NHS and other organisations that store or manufacture blood products would also be affected. 5.2 It is not possible to identify a "typical" business. Businesses will range from small "one-man-band” wholesale dealers, NHS Trusts and hospitals, academic research establishments, up to multi-billion pound international manufacturing businesses. In all cases, the costs involved are simply the direct additional costs from paying higher fees. There are no indirect costs, policy costs or administrative burden costs as a result of these proposals. 5.3 Some examples of potential costs are:

• A large innovative company that: makes 4 complex abridged applications (2 of which are fully eCTD compliant) and 2 eCTD compliant standard abridged applications; has an existing portfolio of 100 products, 50% of which are Prescription Only Medicine (POM), 40% Pharmacy sale and 10% GSL; makes 1 Type II complex, 3 Type II and 12 Type IB variations (none of which are eCTD compliant applications, will pay £268,899 in fees in 2007/2008 compared to £253,774 in 2006/2007. If he were able to make all of his applications eCTD compliant, his cost would be £262,567. The sum payable in fees is likely to comprise a very small part of such a company’s turnover.

• A generic company that: has a portfolio of 15 POM products, 50 Pharmacy

sale products and 30 GSL products; makes 5 standard abridged applications; makes 16 Type IB variations; and has an inspection in year, will pay around £141,138 in 2007/2008 compared to £133,007 in 2006/2007. If he were able to make fully compliant eCTD applications his costs would be £138,928.

• An NHS hospital blood bank requiring to pay annual haemovigilance fee, an

annual compliance fee and has a short inspection in year would have paid £1,534 in 2006/2007 but for the same services in 2007/2008 would pay £2,158 – a difference of £624. Hospital blood bank inspections are targeted according to assessed risk and will generally take place every few years. The same hospital blood bank, if there were no inspection in year, would pay £1,032 in 2007/08 instead of £775 in 2006/7 – an increase of £257.

Benefits 5.4 The benefits are to all sectors of the pharmaceutical industry (relating to human medicines), research facilities, NHS organisations, blood establishments and more generally to the public health. Stakeholders will continue to see benefit from improvements in service levels from the MHRA in terms of speed and predictability of

33

processing of licence applications. The public health will benefit from these measures by ensuring that the MHRA is adequately resourced for the work it undertakes in ensuring the safety, quality and efficacy of the medicines used by patients in the UK and the safety and suitability of blood establishments. 5.5 A key concern of pharmaceutical companies is that they receive a prompt and efficient response from the MHRA when they submit applications or variations for the licences that they hold. The Agency recognises that the business costs to companies from slower than expected processing of applications (for example delayed product launches) can greatly outweigh the costs from the fees themselves. The intention of Option 1 is that fees are set in such a way that the resources can be concentrated on the areas where improvements are most needed and can most effectively be made. Costs 5.6 Regulatory activity in this sector is in large part demand-led, in that companies choose whether to submit applications for new licences or variations to existing ones. In some areas, such as inspections, the Agency – following legal requirements and guidance – determines the degree of regulatory activity, although as noted below, companies have a degree of control in this area too. It is therefore not possible to give a reliable indication of total additional costs from these proposals. The Agency’s estimate of the overall average increase is 4.9 per cent, which – on the basis of activity remaining the same as this year – would amount to roughly £3.1m in total. 5.7 For individual companies, as set out in the case studies above, the costs will vary according to the business they are in and the activities they choose to undertake. The proposals in these Regulations also allow companies to have a greater degree of control and choice as to the regulatory fees they face, in particular:

By choosing to adopt the eCTD standard of electronic working (which is accepted as the future standard for all regulatory business across Europe and beyond), companies can ensure that their product licence application and variation fees remain frozen at 2006/7 levels;

The risk-based approach to inspection means that more compliant companies can expect to have fewer inspections than those who give cause for concern. This in itself would lead to lower fees as a result of less frequent inspections. In addition, the Agency is consulting on the introduction of daily inspection fee rates from April 2008, which would also benefit more compliant companies in that the fees per inspection would be set proportionate to the actual resources used.

5.8 In these areas, therefore, the degree of additional costs faced by companies from fee increases is in companies’ own hands. 5.9 There are no associated policy costs or administration costs from these proposals. Impact on drug prices 5.10 There is unlikely to be a significant impact on drug prices to the NHS through these proposals. The biggest impact is likely to come through the change in the way fees are charged for imports of unlicensed drugs and this has been estimated to add £0.04 to each pack or dosage regime if fully passed on to customers. Much of this

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business is destined for the private market rather than the NHS, although detailed information on purchasers of imported unlicensed medicines is not available. 6. Small Firms Impact Test 6.1 Some of the businesses affected by these proposed fee increases are small firms. The overall effect of the proposed fee increase will vary depending on what types of licences companies have and how active their business is. [During the consultation process we will be discussing the effects of these proposals with one or two small companies and will complete this section in more detail. 6.2 Examples of the effects on small businesses of option 1 might be:

• A small wholesale dealer dealing in General Sales List (GSL) product only (probably the smallest business within the whole sector) will pay an annual periodic fee of £141 in 2007/2008 which is £10 greater than in 2006/2007 and 2005/06. If he also has an inspection during the coming year (these are generally carried out on a 5-year cycle for GSL wholesale dealers), it will cost £747 compared to £712 in 2006/2007. For this particular small business, increased costs will amount to £45 over the year if he has an inspection in the coming year - if he does not, his costs will increase by £10. If he applied to the Agency’s Finance Department, he would have the option to spread the cost of the inspection over two years by paying 50% of the fee on receipt of the invoice and the remaining 50% 12 months later. This applies to all examples.

• A small manufacturer holding five marketing authorisations for General

Sales List products, may need to take into account annual periodic fees; an inspection fee; and the assessment of a new label and leaflet. In 2007/2008 the company would pay £6,424 compared to £5,964 in 2006/2007.

• An application from a new wholesale dealer for a standard licence would

remain the same in 2007/2008 as in 2006/2007. There is no increase in this fee.

6.3 Specific impact tests will be undertaken with one or two small companies and the results added here after consultation. 6.4 The effect of Option 2 would be that small firms’ costs in 2007/2008 would remain the same as in 2006/2007. 6.5 The effect of Option 3 would be to increase costs for smaller companies by, say, 3.2% compared to 2006/2007. Using the specific examples above, the increases in fees for the three examples shown would amount to £26.97, £190.84, and £49.34 respectively. In the third example, this would be a higher cost than in Option 1. 6.6 It is recognised that although regulatory fees represent a relatively small element in the annual outgoings of a small pharmaceutical business, it is likely to represent a greater proportion of their outgoings than for larger businesses. The smallest of the businesses in the pharmaceutical industry do not tend to be

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developmental companies and so costs associated with applications for new products rarely arise. 6.7 The MHRA operates a number of provisions to assist smaller companies, for example:

• reduced fees for certain smaller companies; • lower periodic fees for products with low turnover; • extended terms of payment of a number of capital fees.

6.8 The Agency will consider further assistance it is able to offer. However, reducing fees below costs incurred would lead to cross-subsidisation from fees paid by other companies, so it is not possible to offer general fee reductions for smaller companies. 7. Competition Assessment 7.1 The proposed fee increases will affect a number of different markets within the pharmaceutical industry and the NHS. No organisation may operate in the pharmaceutical market in the UK (whether in manufacturing, distribution or sales) without being subject to the regulatory system operated by the MHRA. Regulatory fees are a permanent feature of the market, and we do not anticipate that the increases are likely to have any significant impacts for competition in any of the affected markets. 7.2 Fees expenditure represents a relatively small proportion of the annual outgoings of most of the affected firms, and this will continue to be the case following implementation of the proposed increases. The current fees structure provides for reductions in the case of certain smaller companies and lower periodic fees for products with low turnover. There is also provision for paying by instalments. This helps to mitigate potentially disproportionate effects on smaller participants in the affected markets and any potential barriers to entry. In the light of these factors, we consider that proposed increases will not be sufficient to result in any significant change to the structure of competition in the affected markets. 8. Equality Impact Assessment: 8.1 An initial Equality Impact screening assessment has been carried out, which has shown that a full assessment is not required as the proposed policy has no disproportionate impact on race or other relevant equalities. The proposed policy will not have any disproportionate impact on rural populations. 9. Enforcement, Sanctions, and Monitoring 9.1 The new proposals will be enforced by the Finance Division of the Agency who is responsible for raising invoices and collecting revenue for the Agency. There are certain sanctions where some fees are paid late and an additional charge is incurred. Work will not usually be started on applications which have not been accompanied by a payment. The measure of whether the policy meets its objectives will be apparent through the year through monitoring the budgets and also through auditing final accounts.

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10. Implementation and delivery plan 10.1 The new fees will apply to all applications received on or after the 1st April 2007. The new fees will be advertised on the MHRA’s website and all those affected will be made aware through the consultation exercise. 11. Post-implementation review 11.1 The new fees and the anticipated income through estimated volumes have been matched with the Agency’s budget plan for 2007/2008. 11.2 MHRA fee levels are subject to continuous rigorous 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 MHRA is reflected in the fees charged to industry. In addition, the Agency is seeking efficiencies from within its working practices, both to speed up the processes and also to provide a better standard of service from within current resources. 12. Summary and Recommendations 12.1 Option 1 best achieves the objective of ensuring that costs to the pharmaceutical industry reflect the actual cost of the work undertaken by the MHRA in connection with medicines regulation. It will allow the MHRA to undertake its responsibilities for protecting public health. It will provide incentives, and target resources, in a way that supports the Agency’s priority of addressing performance improvement in areas where response times are slow. In order to ensure that over the coming year there are sustained improvements in the product licensing processes, the fee proposals as set out in Option 1 represent the most effective option.

Summary costs and benefits Table

Option Total benefit per annum: economic, environmental,

social

Total cost per annum: economic, environmental, social, policy and

administrative 1 - MHRA fully funded to enable it

to fulfil current functions and new requirements without loss of quality - companies receiving prompt and effective service with improved speed of decision making - protection of public health by ensuring swift action is taken in response to defective medicines and adverse reactions, etc.

- Total cost to industry, roughly £3.1m

2 No additional cost to industry from MHRA fees

- delays for companies in having medicines authorised, with

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consequent costs of lost potential earnings - MHRA inadequately funded and not able to fulfil public health responsibilities - Delays in getting urgent medicines on to the market - Failure to meet terms of Trading Fund Order

3 Some resources for Agency to meet additional regulatory requirements, though not sufficient to maintain current levels of service

- Total cost to industry, roughly £2m - Possibility of cross-subsidisation of fees contrary to Treasury guidelines - No incentive for eCTD, reducing the potential to improve efficiency of processes - Inability of Agency to recruit essential staff, hampering ability to lift performance levels in key areas

13. Declaration: I have read the Regulatory Impact Assessment and I am satisfied that benefits justify the costs. Signed by the responsible Minister ............................................................ Date ............................................................. 14. Contact point Any enquiries about these Regulations should be made, in writing to: Mrs Karen Salawu Fees Policy Medicines and Healthcare products Regulatory Agency 16-160 Market Towers 1 Nine Elms Lane London SW8 5NQ Tel: 020 7084 2216 e-mail:[email protected]

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Annex D

RESPONSE TO CONSULTATION LETTER MLX

MHRA FEES FOR 2007/2008

Please complete the proforma below and return to: Mrs K Salawu, MHRA Fees Policy Unit, 16th Floor, Market Towers, 1 Nine Elms Lane, London SW8 5NQ by 5 FEBRUARY 2007 Please note that unless your response is specifically marked as “in confidence”, it will be made publicly available on request. Name: ……………………………………………………………… Company/ Organisation Name: …………………………………………………… Industry Sector*……………………………………………………………………… *for example, wholesaler, blood establishment, generic medicines manufacturer, etc. Please also specify which trade association your company/ organisation belongs to, if any. This information is not compulsory, but it will help us to categorise consultation comments more effectively. We have the following comments to make on the proposals for fees for 2007/2008: Comments (Please use additional sheets as required):

Documents

To all licence holders, blood banks, blood establishments ...the MHRA for the regulation of medicines, including herbal and homeopathic medicines, and blood establishments and blood