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As part of the advanced therapy medicinal product (ATMP) regulation, the hospital exemption (HE) was enacted to accommodate manufacturing of custom-made ATMPs for treatment purposes in the European Union (EU). However, how the HE pathway has been used in practice is largely unknown. Using a survey and interviews, we provide the product characteristics, scale and motivation for ATMP manufacturing under HE and other, non-ATMP-specific exemption pathways in seven European countries. Results show that ATMPs were manufactured under HE by public facilities located in Finland, Germany, Italy and the Netherlands, which enabled availability of a modest number of ATMPs (n = 12) between 2009 and 2017. These ATMPs were shown to have close proximity to clinical practice, and manufacturing was primarily motivated by clinical needs and clinical experience. Public facilities used HE when patients could not obtain treatment in ongoing or future trials. Regulatory aspects motivated (Finland, Italy, the Netherlands) or limited (Belgium, Germany) HE utilization, whereas financial resources generally limited HE utilization by public facilities. Public facilities manufactured other ATMPs (n = 11) under named patient use (NPU) between 2015 and 2017 and used NPU in a similar fashion as HE. The scale of manufacturing under HE over 9 years was shown to be rather limited in comparison to manufacturing under NPU over 3 years. In Germany, ATMPs were mainly manufactured by facilities of private companies under HE. The HE enables availability of ATMPs with close proximity to clinical practice. Yet in some countries, HE provisions limit utilization, whereas commercial developments could be undermined by private HE licenses in Germany. Transparency through a public EU-wide registry and guidance for distinguishing between ATMPs that are or are not commercially viable as well as public-private engagements are needed to optimize the use of the HE pathway and regulatory pathways for commercial development in a complementary fashion. [ABSTRACT FROM AUTHOR]