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TWENTY YEARS OF CHANGE – NOT FOR THE FAINT HEARTED
Hit 9151	2016/06/02
TWENTY YEARS OF CHANGE – NOT FOR THE FAINT HEARTED *Don Robertson* International Coordinator, *World Council on Isotopes* Introductory remarks Arguably the event which had the most profound impact on Mo-99 production was the decree that the industry should convert from HEU to LEU. The impact was twofold in that the reactors were also required to convert to LEU fuel. In general the conversion resulted in decreased thermal neutron fluxes in the reactors. This meant lower Mo-99 yields per target plate. This impact was further exacerbated by the fact that there was necessarily a reduction in the amount of U-235 in an LEU target as compared to an HEU target. The Mo-99 producer ended up with lower yields per plate, increased waste and in general a significant increase in production costs. While one understands the drive for non-proliferation one does wonder if there might not perhaps have been some room for Back in the 1990’s Mo-99, for example, was produced using High Enriched Uranium (HEU) as target material, the product was categorised as a radiochemical and it was a simple and straightforward process to maintain and/or upgrade a production facility. There was always a high safety awareness and an understanding of the non-negotiable quality standards which had to be met. In many instances Mo-99 producers enjoyed the benefits of Government subsidisation. This enabled isotopes to be supplied at prices which did not reflect the full cost of production. It did however have the positive benefit of nurturing nuclear medicine enabling the establishment and growth of this important modality to the significant benefit of humankind. This early Government subsidisation unfortunately has engendered a lack of appreciation for the true value of the isotope and still haunts the industry to this day.. Since these early days production costs and regulatory constraints have increased exponentially in a market where unrealistic expectations of cheap isotopes persist. Conversion to LEU Arguably the event which had the most profound impact on Mo-99 production was the decree that the industry should convert from HEU to LEU. The impact was twofold in that the reactors were also required to convert to LEU fuel. In general the conversion resulted in decreased thermal neutron fluxes in the reactors. This meant lower Mo-99 yields per target plate. This impact was further exacerbated by the fact that there was necessarily a reduction in the amount of U-235 in an LEU target as compared to an HEU target. The Mo-99 producer ended up with lower yields per plate, increased waste and in general a significant increase in production costs. While one understands the drive for non-proliferation one does wonder if there might not perhaps have been some room for consultation and negotiation. For example the rigidly imposed limit of 20% enrichment which appears to have been arbitrarily selected. Some flexibility allowing say 25% for Mo-99 targets might have been helpful. This was not to be. Ultimately, the limit was imposed and the Mo-99 producers had to make the most of the hand which was dealt to them: LEU conversion led to significantly increased production costs while the market has steadfastly refused any form of price increase or premium, rather preferring the apparently cheaper HEU product and decreasing the industry’s operating margins. Regulatory Creep A series of factors which have significantly impacted upon the industry can best be grouped under the general heading of regulatory creep. These include the ever increasing demands of cGMP and then also reaction of Regulators post Fukushima and more recently even from the Comprehensive Test Ban Treaty Organisation (CTBTO). While one fully appreciates the need for the high safety standards and the application of good manufacturing practices, one could possibly put forward an argument that the standards should be appropriate to the industry concerned and not just a one size fits all approach. For example cGMP requirements for Active Pharmaceutical Ingredients (API) are now as stringent as those of final product and Power Reactor regulatory standards and requirements are imposed on Mo-99 production facilities. In the interests of compliance with the demands of cGMP, Mo-99 producers have been obliged to significantly increase the headcount particularly in quality departments. These folk are required to generate numerous procedures and piles of documentation related to production; these are scrutinised by auditors in great detail leading to findings which then have to be urgently addressed in order to continue production and supply. It would be interesting to review statistics on the impact of cGMP on the quality and consistency of the quality of an API such as Mo-99. The isotope producers had no say in this process with cGMP being imposed upon the industry. The consequences for the producers were, yet again, significantly increased production costs with, yet again, little possibility of recouping these costs. Following the Fukushima event there was understandably a strong reaction from Nuclear Regulators which, rather than remaining confined to power reactors, spilled over to research reactors, Mo-99 production facilities and even research reactor fuel manufacturers. Clearly the highest possible safety standards are non-negotiable but as with the examples of LEU conversion and the implementation of cGMP, the same one size fits all approach was adopted, resulting in an intolerable operating environment where even relatively minor operational activities tend to come under regulatory scrutiny. Clearly safety standards have been lifted to a higher level. That said, one should bear in mind the historically impeccable safety records of most Mo-99 production facilities and be wary whether as to whether the industry is not getting too close to the realm of negative profitability. A further looming additional requirement is that of the proposed introduction of a release limit for radio-xenon by Mo-99 producers. Currently producers release minute quantities of gaseous effluent, well within internationally accepted norms, and which has no impact on the environment or public at large. However, there is increasing momentum regarding the introduction of a massively reduced new release criteria, which will have major cost implications for producers and provide no benefit to patients whatsoever. Full Cost Recovery The High Level Group for Medical Radioisotopes (HLG-MR) has taken the lead in driving the concept of Full Cost Recovery (FCR) particularly in the Mo-99 industry. It took a Mo-99 supply crisis to result in the creation of the HLG-MR. They did not take long to get to the crux of the problem and identify the unsustainable economics of the Mo-99 supply chain as the root cause of the crisis. It was clear that in order to obtain the desired stability in the supply chain, significant investments would be required and that the price of the product (Mo-99) would have to increase. The efforts of the HLG-MR led a number of Governments to sign a commitment to implement the HLG-MR’s principles that include full cost recovery in their respective countries and, where relevant, cease Government subsidisation of the supply chain. This is an admirable initiative. Unfortunately, like many other admirable initiatives it has not been successful largely because of the inability of Governments in general to implement and/or influence procurement and reimbursement policies as well as pockets of Government subsidisation which are still present in the industry. Is there still a Business Opportunity? The isotope industry of today is a regulatory quagmire which has to be negotiated with great care. While it is currently hardest felt in the Mo-99 industry it most certainly extends beyond Mo-99 into the broader isotope industry. The costs associated with erecting new isotope production facilities have increased dramatically and the cumbersome regulatory processes have caused the time to market to increase significantly. All of this in a market which does not appreciate (or understand) the true value of the products (the isotopes) which are after all the cornerstone of Nuclear Medicine. The overall impact of all these factors is that when an isotope producer does return on investment (ROI) projections prior to embarking upon the construction of a new manufacturing facility or refurbishing an existing one, the business case tends to be at best marginal. Bearing all of the above in mind and knowing the pricing pressures which exist in the market place one could justifiably question the wisdom of those aspirant new producers who are clamouring to enter the world of Mo-99 production. One might also wonder why the existing producers who continually cry hardship remain in the business. Also one might wonder why companies are, for example, investing millions of Dollars in the procurement of 70 MeV Cyclotrons to produce Sr-90, building sophisticated production facilities to produce Lu-177 nca and various other initiatives. In some instances, particularly among some of the aspirant new entrants to the Mo-99 industry one can only imagine that the novelty of exploiting new technologies outweighs business realities. In general however, presuming business plans have been developed, one could query the realism of the underlying business assumptions. As previously mentioned, marginal business cases are not restricted to the Mo-99 industry but also to the production of various other isotopes. Why are companies investing considerable amounts of money in new production facilities to produce isotopes for an industry which currently does not understand or appreciate the true value of the isotope? Why invest into an industry where the regulatory hurdles are becoming major barriers to entry and new “rules of the game” are introduced by external parties without any form of consultation? A Long-term Investment Fortunately there are those who appreciate the power of nuclear medicine as a diagnostic modality and are cognisant of the significant advances which are being made with new therapeutic applications. One must presume that there will come a time when the market and the public at large will appreciate the true value isotopes as the core ingredient of nuclear medicine. In the years to come there will hopefully be appreciation for the handful of isotope producers who against all odds have persevered with something that they truly believe in and in so doing have nurtured and grown nuclear medicine as an indispensable component of global healthcare provision. The isotope industry is not for the faint hearted or those out to make a quick buck. For those who are in it for the long haul the returns will be there.

TWENTY YEARS OF CHANGE – NOT FOR THE FAINT HEARTED

Don Robertson

International Coordinator,

World Council on Isotopes

Introductory remarks

Arguably the event which had the most profound impact on Mo-99 production was the decree that the industry should convert from HEU to LEU. The impact was twofold in that the reactors were also required to convert to LEU fuel. In general the conversion resulted in decreased thermal neutron fluxes in the reactors. This meant lower Mo-99 yields per target plate. This impact was further exacerbated by the fact that there was necessarily a reduction in the amount of U-235 in an LEU target as compared to an HEU target. The Mo-99 producer ended up with lower yields per plate, increased waste and in general a significant increase in production costs. While one understands the drive for non-proliferation one does wonder if there might not perhaps have been some room for

Back in the 1990’s Mo-99, for example, was produced using High Enriched Uranium (HEU) as target material, the product was categorised as a radiochemical and it was a simple and straightforward process to maintain and/or upgrade a production facility. There was always a high safety awareness and an understanding of the non-negotiable quality standards which had to be met. In many instances Mo-99 producers enjoyed the benefits of Government subsidisation. This enabled isotopes to be supplied at prices which did not reflect the full cost of production. It did however have the positive benefit of nurturing nuclear medicine enabling the establishment and growth of this important modality to the significant benefit of humankind. This early Government subsidisation unfortunately has engendered a lack of appreciation for the true value of the isotope and still haunts the industry to this day..

Since these early days production costs and regulatory constraints have increased exponentially in a market where unrealistic expectations of cheap isotopes persist.

Conversion to LEU

Ultimately, the limit was imposed and the Mo-99 producers had to make the most of the hand which was dealt to them: LEU conversion led to significantly increased production costs while the market has steadfastly refused any form of price increase or premium, rather preferring the apparently cheaper HEU product and decreasing the industry’s operating margins.

Regulatory Creep

A series of factors which have significantly impacted upon the industry can best be grouped under the general heading of regulatory creep. These include the ever increasing demands of cGMP and then also reaction of Regulators post Fukushima and more recently even from the Comprehensive Test Ban Treaty Organisation (CTBTO). While one fully appreciates the need for the high safety standards and the application of good manufacturing practices, one could possibly put forward an argument that the standards should be appropriate to the industry concerned and not just a one size fits all approach. For example cGMP requirements for Active Pharmaceutical Ingredients (API) are now as stringent as those of final product and Power Reactor regulatory standards and requirements are imposed on Mo-99 production facilities.

In the interests of compliance with the demands of cGMP, Mo-99 producers have been obliged to significantly increase the headcount particularly in quality departments. These folk are required to generate numerous procedures and piles of documentation related to production; these are scrutinised by auditors in great detail leading to findings which then have to be urgently addressed in order to continue production and supply. It would be interesting to review statistics on the impact of cGMP on the quality and consistency of the quality of an API such as Mo-99. The isotope producers had no say in this process with cGMP being imposed upon the industry. The consequences for the producers were, yet again, significantly increased production costs with, yet again, little possibility of recouping these costs.

Following the Fukushima event there was understandably a strong reaction from Nuclear Regulators which, rather than remaining confined to power reactors, spilled over to research reactors, Mo-99 production facilities and even research reactor fuel manufacturers. Clearly the highest possible safety standards are non-negotiable but as with the examples of LEU conversion and the implementation of cGMP, the same one size fits all approach was adopted, resulting in an intolerable operating environment where even relatively minor operational activities tend to come under regulatory scrutiny. Clearly safety standards have been lifted to a higher level. That said, one should bear in mind the historically impeccable safety records of most Mo-99 production facilities and be wary whether as to whether the industry is not getting too close to the realm of negative profitability.

A further looming additional requirement is that of the proposed introduction of a release limit for radio-xenon by Mo-99 producers. Currently producers release minute quantities of gaseous effluent, well within internationally accepted norms, and which has no impact on the environment or public at large. However, there is increasing momentum regarding the introduction of a massively reduced new release criteria, which will have major cost implications for producers and provide no benefit to patients whatsoever.

Full Cost Recovery

The High Level Group for Medical Radioisotopes (HLG-MR) has taken the lead in driving the concept of Full Cost Recovery (FCR) particularly in the Mo-99 industry. It took a Mo-99 supply crisis to result in the creation of the HLG-MR. They did not take long to get to the crux of the problem and identify the unsustainable economics of the Mo-99 supply chain as the root cause of the crisis. It was clear that in order to obtain the desired stability in the supply chain, significant investments would be required and that the price of the product (Mo-99) would have to increase. The efforts of the HLG-MR led a number of Governments to sign a commitment to implement the HLG-MR’s principles that include full cost recovery in their respective countries and, where relevant, cease Government subsidisation of the supply chain. This is an admirable initiative. Unfortunately, like many other admirable initiatives it has not been successful largely because of the inability of Governments in general to implement and/or influence procurement and reimbursement policies as well as pockets of Government subsidisation which are still present in the industry.

Is there still a Business Opportunity?

The isotope industry of today is a regulatory quagmire which has to be negotiated with great care. While it is currently hardest felt in the Mo-99 industry it most certainly extends beyond Mo-99 into the broader isotope industry. The costs associated with erecting new isotope production facilities have increased dramatically and the cumbersome regulatory processes have caused the time to market to increase significantly. All of this in a market which does not appreciate (or understand) the true value of the products (the isotopes) which are after all the cornerstone of Nuclear Medicine. The overall impact of all these factors is that when an isotope producer does return on investment (ROI) projections prior to embarking upon the construction of a new manufacturing facility or refurbishing an existing one, the business case tends to be at best marginal.

Bearing all of the above in mind and knowing the pricing pressures which exist in the market place one could justifiably question the wisdom of those aspirant new producers who are clamouring to enter the world of Mo-99 production. One might also wonder why the existing producers who continually cry hardship remain in the business. Also one might wonder why companies are, for example, investing millions of Dollars in the procurement of 70 MeV Cyclotrons to produce Sr-90, building sophisticated production facilities to produce Lu-177 nca and various other initiatives.

In some instances, particularly among some of the aspirant new entrants to the Mo-99 industry one can only imagine that the novelty of exploiting new technologies outweighs business realities. In general however, presuming business plans have been developed, one could query the realism of the underlying business assumptions. As previously mentioned, marginal business cases are not restricted to the Mo-99 industry but also to the production of various other isotopes.

Why are companies investing considerable amounts of money in new production facilities to produce isotopes for an industry which currently does not understand or appreciate the true value of the isotope? Why invest into an industry where the regulatory hurdles are becoming major barriers to entry and new “rules of the game” are introduced by external parties without any form of consultation?

A Long-term Investment

Fortunately there are those who appreciate the power of nuclear medicine as a diagnostic modality and are cognisant of the significant advances which are being made with new therapeutic applications. One must presume that there will come a time when the market and the public at large will appreciate the true value isotopes as the core ingredient of nuclear medicine. In the years to come there will hopefully be appreciation for the handful of isotope producers who against all odds have persevered with something that they truly believe in and in so doing have nurtured and grown nuclear medicine as an indispensable component of global healthcare provision. The isotope industry is not for the faint hearted or those out to make a quick buck. For those who are in it for the long haul the returns will be there.

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