Consultation outcome

Introduction

Updated 31 January 2023

Background

Generally, wherever the MHRA provides a direct service for medicines, medical devices or blood components for transfusion regulatory work, a fee is charged to recover the cost of the work involved, in line with HM Treasury guidance Managing Public Money.^{[footnote 1]} Although medical devices are primarily funded through a grant from the Department of Health and Social Care, there are aspects of the MHRA’s devices work that are fee dependent.

The cost of a fee takes into account numerous factors, including identifying the various activities involved in delivering the fee (this can involve anything from processing and registration to technical assessment and evaluation of data), the time these activities take, and the staff level, grade and seniority required to complete the task. In addition, in line with HM Treasury’s Managing Public Money, the Agency is also required to factor in corporate overhead costs and system investments.^{[footnote 2]}

The MHRA’s statutory fees are set out in legislation such as The Medicines (Products for Human Use) (Fees) Regulations 2016^{[footnote 3]}. The fees charged in relation to medicines and medical devices can be amended through secondary legislation using the powers in the Medicines and Medical Devices Act 2021.^{[footnote 4]}

The MHRA’s statutory fees have not been increased since financial year 2016/17 for medicines, financial year 2017/18 for devices, and financial year 2010/11 for blood components for transfusion. Decisions to not adjust fees were made following 2016 and 2017 in order to (1) ensure as much certainty and stability for industry throughout the EU Exit period and (2) while the Agency responded to the unprecedented challenge of COVID-19.

The principles for charging fees are set by HM Treasury in Managing Public Money. The basic principle states that ‘the standard approach is to set charges to recover full costs’.^{[footnote 5]} This full cost-recovery approach means that the regulated bear the cost of regulation, as well as ensuring the MHRA does not profit from fees or make a loss which must then be subsidised by the Department of Health and Social Care or wider Government.

This is important because the MHRA has been operating as a Trading Fund since 2003. However, in 2019 the Office for National Statistics reviewed the sector classification of the MHRA and reclassified it from a Trading Fund to a market regulatory agency. The removal of Trading Fund status was given legal effect by the Medicines and Healthcare Products Regulatory Agency Trading Fund (Revocation) Order 2022 which came into force on 1 April 2022.This reclassification means that the MHRA is not able to retain and rely on cash reserves to manage areas of under-recovery as it has done previously. This means that any over or under spend will directly impact the financial position of the Department of Health and Social Care, HM Treasury, and have implications for other Government Departments.

The MHRA has recently undertaken a review of its statutory fees. A summary of the review’s purpose, aim and scope can be found at Annex A.

The review found that numerous areas of the MHRA’s work are under-recovering. Adjustments therefore need to be made to the MHRA’s statutory fees to ensure all costs involved in delivering the activity associated with each fee are recovered. This is essential for ensuring the MHRA works within the principles of HM Treasury’s Managing Public Money, and also to ensure the Agency is self-sufficient and financially sustainable in the long-term.

Informal consultation with industry, for example in the Medicines Industry Group and Medical Devices Industry Liaison Group meetings, indicates that primary and overarching concerns among industry stakeholders are the quality and stability of the MHRA’s services and ensuring any increase in fees is met with an increase in performance. This is a valid concern, and one of the driving factors for amending the MHRA’s statutory fees is that by ensuring the MHRA is sufficiently funded and resourced, this will ensure the MHRA is equipped to provide industry with the high-quality service they expect.

Policy objectives

The fee proposals set out in this document are designed to ensure the MHRA is resourced to provide the service that patients, the public and industry want and expect. They have been designed with the specific aim of achieving cost recovery, in line with HM Treasury’s principles on Managing Public Money. This will ensure that the MHRA is financially sustainable in the long-term, enabling a responsive and efficient regulatory service that protects and improves patient and public health by facilitating access to high-quality, safe, effective and innovative medical products. Without amending statutory fees, the MHRA will not recover its costs and will not be able to provide the services industry require to enable them to market their products in the UK.

1. HMT, 2022, Managing public money - GOV.UK (www.gov.uk) ↩

2. HMT, 2022, Managing Public Money, section 6.2.1, p.46. ↩

3. The Medicines (Products for Human Use) (Fees) Regulations 2016 (legislation.gov.uk) ↩

4. Medicines and Medical Devices Act 2021 (legislation.gov.uk) ↩

5. HMT, Managing Public Money, 2022, p.46. ↩