Ref.

Ares(2012)118034 - 02/02/2012

Annex
Options regarding the introduction of fees for the financing of
the medical device regulatory system

1. Legal basis for the levy of fees: yes or no?

a) No EU provisions regarding fees

This option would continue leaving it to the Member State to determine the way how to
finance the activities conferred on them by EU legislation. It would not consider the
possibility of charging notified bodies or economic operators for activities to be carried
by the Commission (JRC/SANCO) under the future legislation and would maintain the
whole budgetary burden of these activities on the EU budget with the risk that this
budget would not be sufficient.

Not addressing the question of funding the CAs'/Commission's activities would probably
be supported by defenders of the subsidiarity principle. Others would consider it as a
'missed opportunity'. It would not give the EU a tool to address the growing problem of
under-resourced CAs, but maintain or even worsen the uneven situation in the Member
States.

b) Introducing a legal basis for levying fees or charges

This option would provide the legal basis that for certain activities, fees could be levied
by the CAs and/or the Commission.

In the context of the current economic climate with stress on promoting growth, this
option may risk being perceived as impacting the competitiveness of the European
medical device industry. Such criticism could be countered by pointing to the facts (1)
that the later introduction of fees would be subject to an impact assessment and (2) that
industry is currently exposed to very different fee schemes in the Member States which
would in the future be more consistent. However, it could probably not be avoided that
some Member States would continue levying special taxes on the device industry, in
addition to fees.

From a legal point of view, it would need to be ensured that the fees are not higher than
the costs borne by an authority for its fee-relevant activity. Otherwise they may be
considered as taxes that, subject to Article 113 TFEU, fall into the sovereignty of the
Member States.

The possible introduction of a legal basis for fees is mentioned in the draft impact
assessment and has not given rise to concerns by the IAB or members of the IASG.

Recommendation: The legislative proposals should make provision for the possibility to
set rules on the levy of fees to support the implementation of the regulatory system.

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2. Which activities should be subject to fees, by whom should they be collected and
who should be the beneficiaries?

2.1. Fees in respect of the control on notified bodies

a) Designation/monitoring of notified bodies (Actors: CAs and Commission/JRC)

In the future, the initial assessment as well as periodic surveillance assessments should
be conducted by the national CA together with experts from other Member States and the
Commission/JRC ('joint assessments'). It should be noted that the association of notified
bodies (Team-NB) is in favour of a stable pool of assessors at EU level who should carry
out the initial and all surveillance assessments.

According to a survey conducted by NBOG1 in 2008 among national designating

authorities, 9 out of 24 EU/EFTA countries charge fees for the designation and
monitoring of notified bodies (3 of them with total cost recovery).

The designation/monitoring of notified bodies can be considered as a service that enables

the bodies to carry out a business activity. It therefore appears to be fair (and would
ensure a level playing field) to make all of them pay for the control activities by the CAs
which should include coverage of the costs incurred by other national and Commission
experts. The level of fees would depend on the scope of designation so that larger
notified bodies would be subject to higher fees.

Even though the notified bodies would most likely factor the fees they would have to pay
in the calculation of the fees they charge manufacturers for conformity assessments, it is
not expected that fees on notified bodies would have a significant impact on the costs to
be borne by individual manufacturers. With currently 78 notified bodies designated in the
field of medical devices, the administrative efforts for the collection of fees would also
likely to be limited.

b) Assessment of preliminary conformity assessments requested from notified

bodies (Actors: MDEG (i.e. national experts) and Commission/JRC)

It is envisaged that the revision introduces a mechanism that would allow the medical
device experts designated by the Member States (MDEG) to request from notified
bodies, on a case-by-case basis, the submission of preliminary conformity assessments
for high risk or novel devices, or for devices that belong to a category with high incident
rates. This task would have to be coordinated by the Commission (JRC) and the actual
analysis could be conferred to a rapporteur and co-rapporteur (i.e. experts designated by
the Member States).

The scrutiny of preliminary conformity assessments could be considered as a service to

notified bodies. So, in principle, it would make sense to charge them with a fee. But they
would pass the bill on to the manufacturer concerned.

The levy of a fee would increase the expected resistance against this new scrutiny
mechanism, especially from industry, notified bodies and some Member States who are

1
Notified Bodies Operations Group, Report 2005-2008 (May 2009), p. 14.

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likely to consider the slowdown of the pre-market assessment process as an obstacle to
innovation and rapid market access.

Since the scrutiny would be triggered on a case-by-case basis, the levy of a fee could also
be considered as unfairly discriminating some manufacturers against others. Since
manufacturers and notified bodies would not know in advance whether their file would
be chosen, they could also claim legal uncertainty if they were charged a fee not billed in
from the start. Moreover, it should be avoided that fees could be an incentive for MDEG
members (e.g. potential rapporteurs) to trigger the scrutiny mechanism in cases that are
not duly justified.

The above reasons would rather speak against charging fees for the scrutiny of the
individual conformity assessment file. It could be more appropriate to cross-finance the
scrutiny activity of the MDEG (namely the work of the rapporteur and co-rapporteur)
with fees collected from notified bodies for their designation and monitoring (see above
under point a).

A disadvantage of a cross-financing from the designation and monitoring fees would be

that full cost-recovery would probably not be assured because fees would not be levied
for the concrete activity but in advance on the basis of a 'flat rate'. Subsidiary funding
from the EU budget should therefore be foreseen.

c) Collection and beneficiaries

According to the current thinking, the designation and monitoring ultimately would
remain the responsibility of the individual Member States. Several Member States
already charge fees for this activity and they would most likely oppose loosing this
income. This would speak in favour of making Member States responsible for the
collection of fees to finance their control activities and the reimbursement of
participating experts from other Member States and the Commission (JRC).

As suggested above under point b), the scrutiny of individual conformity assessment files
should be financed by the fees due for the designation and monitoring of notified bodies
(with subsidiary funding from the EU budget).

To keep administrative efforts related to the collection of fees low, it appears appropriate
that the Member States would be responsible for the collection of fees and would have to
transfer a share to the Commission to cover the expenses of the European and other
national assessors of the 'joint assessment team' and the scrutiny mechanism. The
Executive Agency for Health and Consumers (EAHC) could be mandated to receive the
quota from the Member States and transfer the money to the JRC.

Recommendation: Designation/monitoring of notified bodies should be subject to full

cost recovery fees, structured according to the scope of designation. The fees levied on
notified bodies for class III devices should include a fee to finance the scrutiny
mechanism of individual conformity assessment files (with subsidiary funding from the
EU budget). The collection should be ensured by Member States which would transfer a
share to the Commission.

2.2. Fees in respect of the registration of medical devices and economic operators
(Actors: Economic operators and Commission/DG SANCO)

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With the envisaged central registration of all devices and economic operators in the
(further developed) EUDAMED database, we will create a tool that would give the
possibility to levy on the relevant economic operators (manufacturers, authorised
representatives, importers) fees on an annual basis.

The setting up of the necessary IT infrastructure by the Commission (DG SANCO)

should be financed from the EU budget (as it has been the case so far with the current
EUDAMED). But once the registration tool is operating, its maintenance and
management (estimated at €1.5-2 mio/year) could be financed by fees.

The service offered (at EU level) would be the maintenance and management of a central
database and the attribution of a registration number to the registered economic operator.
Due to the high number of manufacturers and different types of devices on the market,
even if low, the fees altogether could still generate a significant income. Even though the
amount and structure of possible fees would need to be carefully considered in a separate
procedure, the turn-over of manufacturers (as suggested by the Irish IMB and UK's
MHRA) would most likely not be admissible as possible criterion for the fee calculation.
The criteria should rather be linked to the number of different devices placed on the
market by a manufacturer and to the risk classification of these devices. Moreover, an
SME-regime and possible exemption of micro-enterprises2 could be foreseen.

A critical point, however, concerns the administrative efforts related to the collection of
a huge number of relatively low amounts of money. This would need to be organised in a
way that the administrative efforts are not disproportionate compared to the benefit.

Three scenarios are to be considered:

(i) the fees are collected by the Commission and used to finance the central database, or

(ii) the fees are collected by the Commission and redistributed to the Member States, or

(iii) the fees are collected at national level and used for financing the CAs.

Scenario (i): Collection by the Commission for the EU budget

From a legal and regulatory point of view, this seems to be the most straightforward
solution. But it would put a significant administrative burden on the Commission for the
collection of the fees. Based on the assumption that the management of the database
costs €2mio/year and that around 18,000 manufacturers would need to register their
devices, the average fee would be around €110 per manufacturer; foreign manufacturers
would need to register via authorised representatives and/or importers. With exemptions
for micro-enterprises, the number of manufacturers subject to fees could certainly be
reduced.

Since the development and management of the Eudamed database, according to the
current work-sharing plan between DG SANCO and JRC, would be a task of DG
SANCO, the deferral of the task to collect the fees on the EAHC should be considered.
To keep administrative efforts at reasonable scale, fees could be collected from

2
Micro-enterprise: less than 10 employees and turnover or balance sheet total equal to or less than
€2mio; see COM(2011)803 – Report of the Commission on minimising regulatory burden for SMEs,
Adapting EU regulation to the needs of micro-enterprises.

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manufacturers and other economic operators on an annual basis for all devices registered
on their behalf.

Scenario (ii): Collection by the Commission for the Member States' budget

Since several Member States currently couple registration of devices at national level
with the collection of fees – a tool they would loose with the envisaged central
registration at EU level – it is expected that they would be adamant to be the beneficiary
or get an equivalent compensation.

However, fee collection for the Member States is not the task of the Commission and
should therefore not be foreseen in the Commission's proposal.

Scenario (iii): Collection at national level for the CAs

The Member States could alternatively request that it would be their right and task to
collect fees related to the registration, possibly further to a validation of the submitted
data by the CA of the Member State where the manufacturer or authorised representative
have their registered place of business. However, a validation of submitted data would be
quite burdensome and not necessarily provide any real added value. The Commission's
proposal should therefore not require this activity from the Member States.

Another argument against a mandatory collection of fees by Member States is that the
income would be very unevenly distributed. Member States with a high number of
manufacturers/authorised representatives would collect more fees, which may be partly
justified by a higher amount of resources needed for control activities, but Member
States without significant industry would generate little income even though they also
need to ensure a functioning vigilance and market surveillance system. A redistribution
of collected fees among the Member States according to predefined criteria, as suggested
by IMB and MHRA, a priori appears too be complex to be implemented in a workable
way.

Finally, some Member States may prefer financing the system from their general budget
and not by fees; an issue that could not be harmonised by the forthcoming proposals.

For the above reasons, the mandatory levy of fees by Member States related to the
registration of devices should not be proposed by the Commission.

Recommendation: The future regulations should make provision for the levy of fees by
the Commission on manufacturers, authorised representatives and possibly importers for
the registration of devices placed on the EU market. Internally, the collection of fees
should be delegated to the EAHC which should transfer them to DG S'ANCO to support
the maintenance and management of the EU database.

2.3. Fees in respect of the evaluation of reported incidents (vigilance) (Actors: CAs
and manufacturers)

EU legislation obliges manufacturers to report incidents to the CAs of the Member States
concerned. The CAs must evaluate the information on incidents made available to them
(also from healthcare professionals).

The evaluation of incidents is an important part of the CAs' work in the interest of
ensuring patient safety and public health. From a fairness point of view, it might be
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appropriate that manufacturers should pay for evaluations triggered by incidents occurred
with their devices. It may even be considered that vigilance activities of the CAs
constitute a kind of service to the industry. In the field of pharmaceuticals, the latest
revision of the pharmacovigilance provisions foresees that industry shall pay for EMA's
activities in this area.

But charging fees for incidents that manufacturers must report is a double-edge sword. It
may be a disincentive for manufacturers to report incidents just to save costs with all the
negative impacts on patient safety and public health. This could only be countered by
draconic penalties in case of non-respect of reporting obligations.

Since the assessment of vigilance cases will remain a national competence (with some
elements of coordination at EU level) and several CAs may evaluate the same type of
incident in parallel, it would also need to be decided which CA could levy a fee in order
to avoid double or multiple fees.

All in all, it does not seem to be appropriate, for the time being, to require CAs to charge
fees for vigilance activities.

Recommendation: EU legislation should not make provision for the levy of fees for
vigilance activities.

2.4. Fees in respect of market surveillance activities with regard to non-compliant

devices (Actors: CAs)

Market surveillance is a responsibility of the Member States across all sectors.

According to our information, other sectors that are subject to Regulation (EC) No
765/2008 on accreditation and market surveillance do not have legislation requiring fees
for financing the state's market surveillance activities. This would, however, not prevent
Member States to recover expenses (e.g. for tests, expert opinions etc.) from economic
operators caused by non-compliant products. But this would not necessarily require a
legal basis in EU legislation.

The concrete market surveillance activities and their costs depend on the nature of the
problems encountered by each Member States and by the organisation of controls. In
accordance with the principle of subsidiarity, the financing should be left to the Member
States.

Recommendation: EU legislation should not make provision for the levy of fees for
market surveillance activities.

2.5. Fees in respect of the assessment and approval of clinical investigations (Actors:
CAs)

The assessment and approval of the clinical investigations is and will remain the
responsibility of the Member States. It is only envisaged that the Commission provides
the IT infrastructure allowing for a single submission of applications for clinical
investigations to be conducted in more than one Member State and some assistance to the
coordination of the assessment of such applications.

Charging fees for approvals of clinical investigations is very sensitive since it may
impact the attractiveness of Europe as location for medical innovation. Like in the field

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of clinical ti·ials for phaim aceuticals, it should therefore be left entirely to Member States
to decide whether they want to subj ect clinical investigations to fees or not.

Recommendation: EU legislation should not make provision for the levy of fees for the
assessment and approval of clinical investigations.

2.6. Fees in respect of advice or testing provided to notified bodie s or manufacturer s