Paris, 15 September 2010


The economic structure of the medical isotope supply chain: the underlying explanation for the shortage

The current economics of the supply chain of the most widely used medical radioisotope are not adequate for supporting new investment. This is the central finding of The Supply of Medical Radioisotopes: An Economic Study of the Molybdenum-99 Supply Chain, published today by the OECD Nuclear Energy Agency (NEA). Without changes to address the market, policy and technology failures, the supply of molybdenum-99 (Mo-99) and its decay product, technetium-99m (Tc-99m), will continue to be unreliable, jeopardising key medical imaging services for millions of patients worldwide.

The supply reliability of Mo-99 has declined over the past decade, due to unexpected or extended shutdowns at the few ageing, Mo-99 producing, research reactors and processing facilities. The study finds that the market's historical foundations have created an economically unsustainable supply chain. Prices for irradiation in research reactors were set too low to sustainably support Mo-99 production and do not provide enough financial incentive to support the replacement or refurbishment of the ageing reactors. The historical commercialisation of the processing stage (during which Mo-99 is extracted and purified from the irradiated targets) reinforced the low prices, as did the pricing structures used further down the supply chain. As a result, governments were subsidising in a non-transparent manner the costs associated with the irradiation services, and in some cases the processing, through their general support to these facilities.

To have an economically sustainable supply chain, remuneration for reactor irradiation services and processing services needs to be based on the full costs of production. In the current environment, where governments are re-examining their level of subsidies to reactors, covering full costs would likely result in higher market prices. However, according to the study, the impact on the final cost of medical diagnostic procedures from a possible price increase would be small. Such price increases would also support the necessary development of a supply chain based on low enriched uranium rather than highly enriched uranium, thereby contributing to global efforts on nuclear non-proliferation.

To create an economically sustainable supply chain, the report provides a number of options for decision makers to consider. A key requirement is for governments to define and to clearly communicate their role in financially supporting the industry. Once this is defined, the full cost of Mo-99 production must be identified and funded. Actors in the supply chain must also recognise the value of having reserve capacity and be willing to pay for this capacity to ensure reliable supply. To overcome the long-standing, longer-term problem of insufficient capital investment, changes must occur.

The Supply of Medical Radioisotopes: An Economic Study of the Molybdenum-99 Supply Chain is the first of a series of reports being prepared in support of the NEA High-level Group on the Security of Supply of Medical Radioisotopes (HLG-MR). The study offers a unique analysis of the economic structure and present state of the Mo-99/Tc-99m supply chain (from reactors to patients), and presents options to governments and other important decision makers for creating a sustainable economic structure. It will also enhance understanding amongst stakeholders of the costs of supplying Mo-99 and ultimately contribute to a better functioning market.

The NEA and its High-level Group on the Security of Supply of Medical Radioisotopes will continue to support efforts to ensure a long-term, reliable supply of these important medical isotopes by providing relevant information, economic analyses, options and recommendations on the market situation.

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