Sittings · Document

DRAFT REPORT (2023/2156(DEC)) 2024-01-16

On discharge in respect of the implementation of the budget of the European Medicines Agency for the financial year 2022

Committee on Budgetary Control · Rapporteur: Petri Sarvamaa

PR_DEC_Agencies

1. PROPOSAL FOR A EUROPEAN PARLIAMENT DECISION

on discharge in respect of the implementation of the budget of the European Medicines Agency for the financial year 2022

(2023/2156(DEC))

– having regard to the final annual accounts of the European Medicines Agency for the financial year 2022,

– having regard to the Court of Auditors’ annual report on EU agencies for the financial year 2022, together with the agencies’ replies,

– having regard to the statement of assurance as to the reliability of the accounts and the legality and regularity of the underlying transactions provided by the Court of Auditors for the financial year 2022, pursuant to Article 287 of the Treaty on the Functioning of the European Union,

– having regard to the Council’s recommendation of … February 2024 on discharge to be given to the Agency in respect of the implementation of the budget for the financial year 2022 (00000/2024 – C90000/2024),

– having regard to Article 319 of the Treaty on the Functioning of the European Union,

– having regard to Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union, amending Regulations (EU) No 1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing Regulation (EU, Euratom) No 966/2012, and in particular Article 70 thereof,

– having regard to Regulation (EC) No 726/2004 of the European Parliament and of the Council of 31 March 2004 laying down Union procedures for the authorisation and supervision of medicinal products for human use and establishing a European Medicines Agency, and in particular Article 68 thereof,

– having regard to Commission Delegated Regulation (EU) 2019/715 of 18 December 2018 on the framework financial regulation for the bodies set up under the TFEU and Euratom Treaty and referred to in Article 70 of Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council, and in particular Article 105 thereof,

– having regard to Rule 100 of and Annex V to its Rules of Procedure,

– having regard to the opinion of the Committee on the Environment, Public Health and Food Safety,

– having regard to the report of the Committee on Budgetary Control (A90000/2024),

1. Grants the Executive Director of the European Medicines Agency discharge in respect of the implementation of the Agency’s budget for the financial year 2022 / Postpones its decision on granting the Executive Director of the European Medicines Agency discharge in respect of the implementation of the Agency’s budget for the financial year 2022;

2. Sets out its observations in the resolution below;

3. Instructs its President to forward this decision, and the resolution forming an integral part of it, to the Executive Director of the European Medicines Agency, the Council, the Commission and the Court of Auditors, and to arrange for their publication in the Official Journal of the European Union (L series).

2. PROPOSAL FOR A EUROPEAN PARLIAMENT DECISION

on the closure of the accounts of the European Medicines Agency for the financial year 2022

(2023/2156(DEC))

– having regard to the final annual accounts of the European Medicines Agency for the financial year 2022,

– having regard to the Court of Auditors’ annual report on EU agencies for the financial year 2022, together with the agencies’ replies,

– having regard to Article 319 of the Treaty on the Functioning of the European Union,

– having regard to Rule 100 of and Annex V to its Rules of Procedure,

– having regard to the opinion of the Committee on the Environment, Public Health and Food Safety,

– having regard to the report of the Committee on Budgetary Control (A90000/2024),

1. Approves the closure of the accounts of the European Medicines Agency for the financial year 2022 / Postpones the closure of the accounts of the European Medicines Agency for the financial year 2022;

2. Instructs its President to forward this decision to the Executive Director of the European Medicines Agency, the Council, the Commission and the Court of Auditors, and to arrange for its publication in the Official Journal of the European Union (L series).

3. MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION

with observations forming an integral part of the decision on discharge in respect of the implementation of the budget of the European Medicines Agency for the financial year 2022

(2023/2156(DEC))

– having regard to its decision on discharge in respect of the implementation of the budget of the European Medicines Agency for the financial year 2022,

– having regard to Rule 100 of and Annex V to its Rules of Procedure,

– having regard to the opinion of the Committee on the Environment, Public Health and Food Safety,

– having regard to the report of the Committee on Budgetary Control (A90000/2024),

A. whereas, according to its statement of revenue and expenditure, the final budget of the European Medicines Agency (the ‘Agency’) for the financial year 2022 was EUR 421 815 000, representing an increase of 11,23 % compared to 2021; whereas the Agency is a fee-funded agency, with approximately 88 % of its 2022 revenue stemming from fees derived from the evaluation of medicines and other business-related activities, 12 % stemming from the Union budget and miscellaneous income;

B. whereas the Court of Auditors (the ‘Court’) in its report on the annual accounts of the Agency for the financial year 2022 (the ‘Court's report’), states that it has obtained reasonable assurance that the Agency’s annual accounts are reliable and that the underlying transactions are legal and regular;

C. whereas with regard to the Agency’s procurement sector, no issues requiring corrective actions were reported for 2022, nor are there ongoing or outstanding corrective actions from previous years’ audits and assessments;

Budget and financial management

1. Notes that budget monitoring efforts during the financial year 2022 resulted in a budget implementation rate of current year commitment appropriations of 96,80 %, representing a decrease of 0,42 % compared to 2021; regrets that the current year payment appropriations execution rate was 71,48 %, representing a decrease of 0,88 % compared to 2021;

2. Observes that for one audited payment of EUR 2 million, the Agency authorised the related budgetary commitment only after the legal commitment was accepted; recalls that this goes against Article 73(2) of the EMA Financial Regulation; calls on the Agency to take immediate action and to implement measures to ensure that all financial transactions are in compliance with the Framework Financial Regulation;

3. Recalls that potential liabilities arising, until 2039, from the lease on the Agency’s former office premises in London remain an ongoing issue; notes with concern that, on 31 December 2022, the total estimated outstanding rent, associated services charges and landlord insurance to be paid by the Agency up to the end of the lease term was EUR 366 million; notes that in July 2019, the Agency reached an agreement with its landlord, and sublet its former premises to a subtenant with effect from July 2019, under conditions that are consistent with the terms of the head lease; acknowledges that the term of the sublease lasts until the Agency´s lease expires in June 2039 and that, since the Agency remains a party to the head lease, it could be held liable for the entire amount remaining payable under the contractual obligations of the head lease, if the subtenant fails to meet its obligations; draws attention to another element highlighted in the Agency’s accounts, namely the uncertainties surrounding the financial performance of the subtenant´s ultimate parent company as a result of the deterioration of its credit rating and the recent debt restructuring; takes note that the Agency and its Management Board are concerned that the Agency, instead of focusing its full effort on its mission of protecting and promoting public health, now must also manage commercial property in a third country, diverting its human and financial resources from its public health responsibilities for the EU citizens; is aware that, on 11 January 2024, the European Parliament Budget Committee held an exchange of views with the Authority regarding the potential amendment to the EMA’s sub-underlease for the Agency’s former premises in London; insists on the need for a political decision in order to secure a long-term resolution on this issue;

Performance

4. Takes note that the Agency in 2022 reported on 41 performance indicators, estimating an implementation rate of 92,60 %; notes that during 2022 the Agency has leveraged its position as chair of International Coalition of Medicines Regulatory Authorities (ICMRA) to progress the work on the harmonisation of international regulatory systems; observes that it has also delivered the implementation of three major pieces of legislation (Clinical Trials Regulation, Veterinary Medicines Regulation and the Extended mandate Regulation) and progress work on data governance;

5. Welcomes that on 1 March 2022, the Agency’s mandate was extended with the entry into force of the Regulation (EU) 2022/123 reinforcing its role in crisis preparedness and management of medicinal products and medical devices; notes that the Regulation required the Agency to set up new bodies, such as the Medicines Shortages Steering Group (MSSG) and the Emergency Task Force (ETF) and in addition, the Agency took on the management of the medical device expert panels which were transferred to the Agency from the European Commission’s Joint Research Centre; notes furthermore that the Agency, under its extended mandate, is responsible for monitoring events that may lead to a crisis, reporting and coordinating EU responses to shortages of critical medicines, medical devices and in vitro diagnostics during a crisis;

6. Highlights that other key achievements in 2022 include the approval of two new vaccines and two COVID-19 treatments, the Emergency Task Force recommended the temporary use of the US-approved monkey pox vaccine Jynneos for Monkeypox to support vaccination efforts by national EU authorities, alongside with an extension of the use of Imvanex to also protect adults from monkey pox; takes note that additionally, the Agency collaborated with Erasmus University Medical Center Rotterdam to establish the Coordination Centre for the Data Analysis and Real-World Interrogation Network (DARWIN EU®), serving as a pathfinder for the proposed European Health Data Space (EHDS) and connecting to EHDS services for use in medicines regulation; notes furthermore that the Safe Agile implementation involved transitioning the Agency's IT portfolio to the Agile way of working, establishing Value Streams aligned with its core mission, and operationalizing Product Teams within them; calls on the Agency to learn from these experiences and to make use of the best practices derived from them in the future;

Efficiency and gains

7. Is aware that during 2022 the Agency continued the implementation of its strategy to achieve efficiency gains, focusing on process improvement and digitalisation;

8. Notes that through the work of its Digital Innovation Lab (DigiLab) the Agency explored opportunities to realise automations of administrative work; observes that DigiLab initiated 14 automation projects, prioritized and endorsed by the Digital Acceleration Leadership Team, alongside the Analytics Center of Excellence, including automations for email categorization, clinical breakpoints list generation, and a pilot EU Reference Dates List Database for efficiency gains in maintenance and publication on the Agency's website;takes note that the Digital Innovation Lab (DigiLab) also worked with the Analytics Centre of Excellence (ACE) to pilot five potential solutions to business challenges;

9. Welcomes that as a component of its digitalization efforts in 2022, the Agency completed the integration of Good Clinical Practice (GCP) and Good Pharmacovigilance Practice (GVP) inspections into its IT portal IRIS, enhancing efficiency, transparency, and collaborative work in line with the Agency's digital transformation program, which oversees inspections for human and veterinary medicines under the centralized procedure or referral process upon request from the Committees for Medicinal Products for Human Use (CHMP) or Veterinary Use (CVMP); invites the institution to find more internal procedures that could be streamlined via digitalization;

10. Notes that as part of the process improvement dimensions, during 2022 the Agency worked on the Agile transformation, with the aim of providing increased transparency, a reduced administrative burden and clearer accountability, through a new governance model and way of working in Information Management/IT;

11. Points out that in 2022, the Agency gradually resumed on-site activities at its building while sustaining flexible working arrangements, allowing up to 60 % teleworking monthly; temporary rules for business travel prioritized virtual participation in conferences, meetings, and trainings, with physical attendance considered for added strategic value, and a decision was implemented to alternate virtual and physical settings for scientific committee meetings and working parties to manage on-site capacity and contribute to carbon footprint control, resulting in lower CO2 emissions compared to pre-pandemic years despite the resumption of physical activities;

Staff policy

12. Notes that, on 31 December 2022, the establishment plan was 99,39 % implemented, with 658 temporary agents appointed out of 662 temporary agents authorised under the Union budget (compared to 657 authorised posts in 2021); notes that, in addition, 192 contract agents, 25 seconded national experts and 114 interims worked for the Agency in 2022;

13. Takes note of the gender distribution in the Agency’s management board, where 36 out of 67 (54 %) are men, while for the overall staff, 568 out of 865 (66 %) are women; notes furthermore that in senior management positions, 17 out of 27 (63 %) are men;

14. Acknowledges the Agency is implementing various initiatives in addressing the gender gap in senior management positions, including a management development program, internal mobility opportunities, and the creation of management communities to encourage and support female staff; notes that, a pipeline is being built from Heads of Office/Service/Work stream, with a progressive increase in female managers; notes furthermore that the retirement of key senior male managers provides recruitment opportunities for females, complemented by an enhanced Employer Branding strategy, targeted recruitment marketing, the establishment of Diversity and Inclusion Working Group and the endorsement of the D&I charter in March 2022;

15. Notes that in 2022 the overtime declared of 72 463 hours was 30 % lower compared to 102 912 hours reported in 2021; notes furthermore that the average overtime in 2022 was 4,3 % compared to the 6,3 % reported in 2021, which is close to the average of 4,0 % recorded during the period 2016-2019; highlights the importance of good work-life balance to improve the wellbeing of the staff;

16. Welcomes that in 2022, the Agency conducted a comprehensive well-being survey, and the resulting recommendations have been integrated into the Agency HR Strategy for 2023-2025;

Prevention and management of conflicts of interest and transparency

17. Takes note that to maintain impartiality and objectivity in the Agency's operations, it regularly adjusts the policies’ scope and implementing processes vis-à-vis emerging risks stemming from new activities and/or interactions with new categories of stakeholders; takes note that in 2022 as a result of the Agency’s new responsibilities in the area of medical devices, in vitro medical devices as well as from its extended mandate, the policy on competing interest for members of the Management Board, policy on competing interest for experts, and the Implementing rules on handling declared interests of staff and candidates before recruitment, have been revised;

18. Notes that the Agency has a breach of trust (BoT) procedure, which sets out how it deals with incorrect or incomplete e-DoIs by experts and committee members, as well with disclosure of confidential information; observes that the BoT procedure was revised in December 2022; highlights that the revised BoT procedure states that it also applies to the other bodies that have been established within the Agency under the Extended Mandate (e.g. Emergency Task Force, both Shortages Steering Groups);

19. Observes that in 2022 two Breach-of-Trust (BoT) procedures were initiated for experts; notes that one case involved a committee member failing to disclose a lecture honorarium, resulting in revised declarations and a three-year restriction and the second case concerned a committee member omitting a close family member interest, leading to a 9-month restriction from the Agency’s activities;

20. Highlights that departing Agency staff sought permission for post-employment occupations, with 22 applications in 2022 resulting in varied authorizations, including both unrestricted and restricted cases; acknowledges that the Agency has been publishing decisions on senior departing from the organization on its corporate website since December 2020, contributing significantly to transparency in handling competing interests;

21. Notes with satisfaction that the Commission’s Internal Audit Service report that took place during 2022 focusing on HR matters confirmed the robustness of the system in place based on a very high staff awareness of the risks involved and the maturity of the internal controls to manage potential conflicts of interests;

22. Notes that, as a technical, scientific body of the EU, the Agency does not formally engage or meet with lobbyists, however, the Agency does engage and meet with stakeholders in accordance with its formal stakeholder frameworks; notes furthermore that meetings with external stakeholders are public and the details are published on the events page of EMA’s website;

Internal control

23. Observes that a questionnaire was prepared to assess the implementation, functioning, and improvement of the 17 principles within the internal control framework; notes that managers and staff members responsible for specific principles or elements received the questionnaire, and interviews were conducted for further clarification; notes furthermore that the overall conclusion is that the internal control system is deemed to be effective and efficient, its components, and principles are generally present and functioning reasonably well while some principles may benefit from minor clarifications or additional information, and adjustments and improvements are suggested;

24. Draws attention to the fact that as result of its relocation in 2019, the Agency leased a building in Amsterdam, which was fully fitted and furnished using the Dutch government’s EUR 15 million incentive scheme, including the donation of furniture and catering equipment; takes note that the Court found that the Agency had not assigned clear identification (such as labels with bar codes) to some of these assets, mainly furniture; notes furthermore that four inventory counts the Agency had carried since relocation repeatedly showed discrepancies (which, with time, decreased from EUR 534 331 to EUR 15 000) between the list of assets donated by the Dutch government, the Agency’s asset register and the assets found on the premises; highlights that the absence of a complete and updated inventory list, specifying the location of tangible assets, goes against Article 87 of the Financial Regulation, and adversely affects the Agency’s ability to ensure the safeguarding of its assets; welcomes that with a view to continuously improving its processes, the Agency will release an updated internal guidance for the management of its assets inventory, adopt a risk-based approach to the labelling of furniture and release a rolling physical checks plan to continuously confirm the accuracy of its inventory;

25. Takes note of the observation from the Court’s report regarding the Agency’s contribution towards certain types of staff childcare costs, such as pre- and after-school care in the Netherlands; notes that for school meals, the Court found that the Agency was not able to provide full evidence of the checks done to ensure that the costs of school meals were excluded, therefore putting into question whether such checks were systematically carried out; observes from the Agency’s reply that meals costs are excluded from school fees and the Agency will file the evidence that school meal costs are excluded from the calculation of the contribution;

26. Notes the result of the activities carried out by the Agency’s internal audit capability, with 6 critical and 19 very important recommendations were issued in 2022; calls on the Agency to address the 14 major recommendations awaiting improvement actions plan as of 31 December 2022 and report back to the discharge authority on the developments in this regard;

Other comments

27. Welcomes that the Agency aligned its long-term climate objectives with the European Climate Law’s target of a 55 % net reduction of greenhouse gas emissions by 2030 (compared to 1990 levels) and achieving climate neutrality by 2050; notes that for energy and water consumption, the Agency translated these objectives into a 15 % reduction per square metre of office space to be achieved between 2012 and 2021; observes that this target took into account the Agency’s growth in that period, and the fact that it had moved into a bigger but also more energy-efficient building, following its relocation from London to Amsterdam; notes that the target was exceeded both for energy and water achieving a 45 % reduction in energy consumption and 63 % in water use per square metre;

28. Takes note that the Agency is in preparation for the Eco-Management and Audit Scheme (EMAS) certification;

29. Welcomes that in 2022 in order to increase the cyber security the Agency adopted the Information Security Strategy and the related implementation plan aiming to enhance the existing safeguards and security processes to protect the Agency’s information assets whilst supporting new business and technological challenges; notes that other important measures were also implemented in 2022 including the establishment of the security training and awareness programme and the implementation of the Security Operation Centre which aims to continuously monitor and improve the Agency’s security posture while preventing, detecting, analysing, and responding to cybersecurity incidents; notes furthermore that the Agency has been working in close collaboration with CERT-EU and ENISA covering many aspects of the information security and cybersecurity domains, also including discussions and regular updates on the upcoming cybersecurity regulation for EU institutions, agencies, and bodies;

30. Commends the Agency for issuing initial advice for sponsors on how to manage the conduct of clinical trials in the context of the disruptions caused by the Russian invasion of Ukraine;

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31. Refers, for other observations of a cross-cutting nature accompanying its decision on discharge, to its resolution of ... on the performance, financial management and control of the agencies.