Annex 1
CIA comments on One Substance: One Registration
GENERAL
In general the CIA support the principle of
one substance: one registration as a means of minimising the amount
of animal testing that will be necessary to meet the requirements
of the REACH regulation. We also believe that in an ideal situation
the creation of a single data package would improve workability,
decision making and increased transparency.
The CIA believe that wherever possible, the
principle of one substance: one registration should be encouraged
and that this be delivered through appropriate incentives for
companies to work together in consortia. However, there must be
flexibility in the system to allow companies to operate outside
of consortia and to register separately when there are real business
reasons for doing so.
DETAILED COMMENTS
ON CONSORTIA
The consortia that have been in existence for
the longest (20-25 years for some) are those for agrochemicals
where some of the disadvantages did not become obvious for many
years. The types of question which invariable arise are exemplified
below.
The question of late joiners and free riders
is the most complex. In essence a late joiner gains all the advantages
of the programme with none of the risks. The studies are complete
and there is therefore no risk that they will fail, the outcome
is known and registration guaranteed. The costs have also already
been paid so on a discounted cash basis there is every incentive
to be a late joiner as opposed to a founder member. Existing consortia
control this by the application of a "risk premium"
(usually 20-25% ) to incurred costs and the addition of interest
at an agreed rate to the payments made. This is not "a barrier
to entry" but rather an acceptance of the enhanced value
of the accumulated data, not to apply it is in effect subsidising
the competition. This is reasonable for a company which joins
at the end of a specific programme and most will agree that it
is fair.
A separate problem comes later. Completed studies
are actually a depreciating asset, much like any other. However
there is a marked reluctance to recognise this and consortia keep
on adding interest to the cost so that in (say) 10 years it would
be much less costly to repeat the study (to modern guidelines—experience
suggests that they will have changed) than to buy into existing
studies. This can be controlled in principle but requires the
imposition of a discount rate on accumulated cost.
The question of late entrants is critical to
success or failure of consortia. Under the current proposals there
could be advantages of referring everything possible to the ombudsman
as a matter of course—advantages from joining the consortium
at the outset are limited to current producers, competitors gain
potentially significant benefits from being late joiners.
The question purity is also crucial to the one
substance: one registration principle for example if a company
manufactures and uses/sells at 60% purity (crude) for some applications
and 97% purity for others. Currently these are regarded as two
chemicals. Will this change? If so what exactly will be tested
as representative? When there are two or more routes to the same
chemical the impurity profiles will differ. What will then be
tested if the chemicals are considered to be the same? Impurity
profiles can also be symbolic of a novel processing route, how
will this be kept confidential? IF an "effect" had occurred
which required regulation, and on further investigation this related
solely to an impurity from one route of synthesis, how would the
costs then be divided? The manufacturers using other routes would
have been significantly disadvantaged by the whole exercise; would
they still be expected to share the cost? Should they be compensated?
If so how and by whom? These question invariably arise during
consortium formation and later. Guidance is needed, especially
if such a relatively short time is to be allowed for formation.
The paper rightly recognises that consortia
move more slowly than single companies and so workability and
timing is an issue of meeting the one substance: one registration
principle through a requirement for mandatory consortia. Experience
shows that even to agree where to place a study and what doses
to apply can take two to three months for a large group whereas
a single Company can generally arrange this within a week or two.
Contract labs know this and always give pessimistic estimates
for start dates etc, to incorporate the inevitable delay. A programme
will need one to two years added if consortia are involved and
we see no way in which legislation can significantly reduce this—it
is not possible to legislate agreement.
Finally there is the question of use. Consider
the case of an HPV chemical used as an intermediate by most producers
but 15te/annum is used in a consumer application. How are the
costs then to be allocated within a consortium. It helps little
to make membership compulsory without any guidance for such matters.
The question would doubtless be referred to the ombudsman, but
on what basis would that body decide? If the costs were shared
by all then the small company producing for the consumer use would
soon be out of business, as the competition could probably produce
more economically and would have all relevant supporting data.
If cost are borne by the appropriate producer how are conflicting
study requirements resolved to avoid duplication?
SPECIFIC COMMENTS
ON THE
PAPER
2. General Approach
"industry will be expected to prepare guidelines
for cost sharing"
We question the legality of this statement in
a system of mandatory consortia formation. Industry cannot be
responsible for the drawing up guidelines for a mandatory process,
as "industry" is not homogeneous.
"the Agency should establish a Ombudsman"
An Ombudsman is to be supported, but it should
be independent and not set up as an office of the Agency.
3. Consortia Framework—a proposal
Pre-registration
We support the concept of a pre-registration
phase to aid the formation of consortia and data-sharing. We also
support the data requirements proposed. However we believe that
18 months for this phase would be a more realistic timescale.
Registration
Cost-sharing—we do not believe that "industry"
should be responsible for drawing up cost-sharing guidelines in
a mandatory process for the reasons stated above.
Timing—a timing aspect not considered
in the paper is that if the prioritisation at registration remains
based on volume, then manufacturers producing in the 1-10T level
will not need to register until seven years after manufacturers
producing in the >1,000T band. The principle of one substance:
one registration delivered through mandatory consortia formation
will disadvantage lower tonnage producers as they will have to
chose either to register early, or buy use of the dossier already
registered even though they may have all data necessary for registration.
4. Role of the Agency
We are concerned at the proposal that the Ombudsman
should be an Office within the Agency. This should be a separate
body as it will be adjudicating on the Agency's policy and there
will be a conflict of interest.
5. The legal case
We are concerned with the "we believe"
language in this section and would like to see the Office of Fair
Trading's response on the competition aspects of working in consortia.
Companies are legally forbidden to disclose sales volumes. Name
plate capacity can be disclosed, but then this would open the
question of what cost sharing criteria could be used for importers
who do not have a name plate capacity.
We do not believe that the use of third party
consortia managers will the anti-competitive aspects of consortia
formation as not only being an added expense, there is also the
question of if there will be adequate numbers of qualified managers
available to assume such a role for the thousands of consortia
that could be set up.
6. Experience to date
This section lists the positive benefits that
have arisen through working in consortia under voluntary programmes,
but recognises that such experiences cannot easily be realised
when working in a regulatory framework, such as the biocides directive.
As this paper proposes a mandatory consortia framework, we would
like to see a more of the justification for the one substance:
one registration proposal based on experience gathering from regulatory,
rather than voluntary programmes.
The comment that " the quickest packages
have been created where company's have acted alone" should
not be overlooked.
CONCLUSION
On balance we believe that compulsory consortia
would be a recipe for substantial delay in the whole process and
lead to significant legal wrangles. The problem is the "usual".
If this is left as a "framework" requirement the details
will be resolved only slowly and at high cost. This has been borne
out in the guideline development to support 91/414 over the last
10 years. If on the other-hand guidelines are specified in detail
then it requires very careful framing to avoid anomalies—and
there is probably insufficient time for this to be achieved.
We believe that if the requirements in the current
Commission's proposals included greater incentives for companies
to work in consortia then the one substance: one registration
principle would more easily be met through a "voluntary"
workable approach. In a majority of cases where real cost savings
could be achieved, then consortia would form as a matter of self-interest.
In the few case where this did not happen, the aim of minimisation
of animal testing could be achieved through a process of "mandatory"
sharing of animal test data under a system similar to that already
outlined in the Commission's proposals.[2]
The offer of an Ombudsman service to aid this
could be useful, and if voluntary, this service could probably
survive with a staff of 20 or so. If compulsory consortium formation
is required we would expect the Ombudsman to need a staff of at
least 500 and even then the entire process could probably be delayed
by one to two years.
2 The CIA's Chemicals Policy Task Force will make
further proposals on how the mandatory sharing of animal test
data could work and on incentives for consortia formation in the
near future. Back
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