1. UNDERSTANDING THE TRANSITION FROM HEU TO LEU RADIOPHARMACEUTICALS

2. Background
GLOBAL THREAT REDUCTION INITIATIVE “The Highly Enriched Uranium (HEU) Reactor Conversion sub- program supports the conversion of domestic and international civilian research reactors and isotope production facilities from the use of WMD-usable HEU fuel to LEU fuel. These efforts result in permanent threat reduction because the use of WMD-usable HEU in the civilian fuel cycle is minimized or eliminated.”
KEY MESSAGE POINT: Government policy has led to a major transition in the nuclear medicine industry.
In response to suggestions from non-proliferation advocates that HEU used in the production of medical isotopes should be eliminated due to security concerns, the US Department of Energy and National Nuclear Security Administration have developed the “Global Threat Reduction Initiative.”
As part of this initiative, the following goals have been established:
CONVERT medical radioisotope production from highly enriched uranium (HEU) to non-HEU or low enriched uranium (LEU) sources.
REDUCE reliance on non-US reactors as the source for the Molybdenum-99 (Mo-99) used in medical radioisotope production by encouraging development of non-HEU technologies to produce Mo-99 in the U.S.
ASSIST global producers of Mo-99 with conversion of their production processes to use low enriched uranium (LEU) targets.
Though it presents immediate operational challenges, the nuclear medicine industry supports this transition. Through the Council on Radionuclides and Radiopharmaceuticals, the industry continues to work with CMS, DOE and the U.S. Food and Drug Administration to examine methods to “pull” more non-HEU based Mo-99 into the U.S.

3. Background
New CMS ruling designed to support transition of medical radioisotope production from HEU to LEU sources.
Beginning January 2013, qualified nuclear pharmacy customers became eligible to be reimbursed an extra $10/dose on products sourced from non-HEU generators.
The incremental payment applies to Medicare Hospital Outpatient doses only.
KEY MESSAGE POINT: CMS reimbursement is available to help defray higher cost of radioisotopes from non-HEU sources.
As a means to support and accelerate this transition, the Center for Medicare & Medicaid Services (CMS) has established a federal funding source. This intent of this reimbursement program is to partially defray the higher cost associated with production of medical radioisotopes from non-HEU sources.
At this point, the CMS reimbursement -- $10/dose on products sourced from non-HEU generators – only applies to Medicare Hospital Outpatient doses.

4. Background
Tc99m, the most utilized isotope in nuclear medicine, is derived from Molybdenum-99.
In today’s marketplace, Mo-99 is produced commercially by intense neutron-bombardment of a highly purified uranium-235 target, followed rapidly by extraction.
The greatest expense associated with unit dose cost is Tc99m.
KEY MESSAGE POINT: The most widely used element in nuclear medicine is Tc99m. Tc99m production and cost is impacted directly by the transition from HEU to LEU production.
Technetium the radioisotopes used in the majority of diagnostic imaging services -- is derived from Molybdenum-99.
HISTORY
Although Tc99m was first discovered in 1937, it wasn’t until the 1960s, with the development of a generator system to produce Technetium-99m, that a practical method for medical use of this element became available.
Since then, Technetium-99m has become the most utilized element in nuclear medicine.
TODAY
The reactors that produce molybedenum-99 today primarily use Highly Enriched Uranium (HEU) as fuel, which is also known as “weapons grade”.
Concerned with potential for terrorist misuse of these medical isotopes, the US government is working to reduce availability of Mo-99 sourced from HEU material.
While this change is important and valuable to national security, it is costly to our industry.

5. Global Supply Chain Eight reactors produce Mo-99
Five Target Processing Facilities extract and process Mo-99
To millions of patients each year.
From nuclear pharmacy to healthcare provider…
KEY MESSAGE POINT: Supply chain through which Tc99m is produced and procured is extensive and expensive.
Here is the supply chain through which Technetium (Tc99m) is procured today:
Click #1: Worldwide, there are eight (8) reactors that produce the global supply of Mo-99m.
None of those production facilities are located in the U.S.
Currently only 2 of these 8 reactors use LEU targets for production of Mo Safari in South Africa and OPAL in Australia.
NRU in Canada currently slated for closure in September New reactor being developed in Russia, not yet operational.
Though LEU Mo-99 has been routine part of LMI supply chain since May 2011, less than 10% of the world’s Mo-99 supply currently comes from the fission of LEU targets.
Today the amount of non-HEU derived Tc99m available is estimated at 10 – 15% of current U.S. volume.
ADDITIONAL NOTES:
8 Reactors Include:
– Belgian Reactor 2 (BR2)
– High-Flux Reactor (HFR) – The Netherlands
– LVR-15 – Czech Republic
– Maria – Poland
– National Research Universal (NRU) – Canada
– Open Pool Australian Lightwater (OPAL)
– Osiris – France
-- Safari-1 (Safari) – South Africa
– Research Institute of Atomic Reactors (RIAR) – Russia (in development)
Click #2: Worldwide, there are five (5) Mo-99 Extraction / Processing Facilities – none in the U.S.
– Atomic Energy of Canada Limited (AECL) (extraction); Nordion – Canada
(processing)
– Australian Nuclear Science and Technology Organization (ANSTO)
– Institute for Radio Elements (IRE) – Belgium
– Mallinckrodt – The Netherlands
– NTP Radioisotopes (NTP) – South Africa
Click #3: From these facilities, the processed Molybdenum is imported into the United States, passing through U.S. Customs on a daily basis.
Click #4: In America, there are two (2) Technetium-99m (Tc-99m) Generator Manufacturers
– Lantheus Medical Imaging – Massachusetts, U.S.
– Mallinckrodt – Missouri, U.S.
Click #5:
Lantheus and Mallinckrodt deliver generators daily to nuclear pharmacies, including Triad Isotopes’ 62 locations.
Specialized Nuclear Pharmacists extract Tc99m from those generators, which is used in preparing doses according to a specific prescription.
After each dose is tested for quality control, they are delivered quickly to the healthcare providers administering nuclear tests.
Click #6: These highly advanced radiopharmaceuticals are used by healthcare providers in an estimated 16.7 million procedures each year.
Two American companies manufacture and deliver Tc99m generators

6. The LEU Difference Reactors no longer subsidized.
5 times more LEU than HEU
material needed to produce Mo-99.
4.7 times more waste produced from LEU than HEU.
HEU and LEU materials must be segregated at all times.
KEY MESSAGE: LEU is more costly to produce. We will lose production capacity by converting to LEU.
There are multiple cost components related to the development of new LEU targets for Mo-99 production.
The most obvious ones of those include:
Upfront development costs for the new LEU target design
Production facility and reactor modification costs
Regulatory, licensing and other transitional costs
In addition, other related expense factors include the following:
Click #1: SUBSIDIZED FACILITIES
Many of the reactors in use today are subsidized by their respective governments. Why? They were built for other purposes; making medical isotopes was an added function.
New reactors being built, and those being converted, will not have the government subsidies.
Under CMS rule, full cost of the products must be passed along to the end user.
Click #2: LARGER TARGETS REQUIRED
It takes an estimated FIVE TIMES more LEU material to produce the same amount of Molybdenum-99.
Overall production capacity will be decreased
Click #3: MORE WASTE
The LEU process produces almost five times more waste than the higher density HEU process.
This incurs cost and procedural challenges associated with the interim storage and disposal of process waste.
Click #4: SEGREGATION REQUIRED
To comply with CMS requirements, once the LEU derived Mo-99 is produced, it must be segregated from HEU Mo-99 through every step in the supply chain.
This requires special handling by processors, manufacturers, nuclear pharmacies and hospitals – extra steps that require additional equipment, procedures, labeling, coding, and other redundancies.

7. New Technology Development
GLOBAL THREAT REDUCTION INITIATIVE
GTRI originally partnered with three U.S. domestic commercial entities to accelerate the development of a diverse set of non-HEU technologies to produce Mo-99 in the United States. B&W has since dropped out. Efforts are underway through Shine and NorthStar to develop LEU fission technology, neutron capture technology and accelerator technology.
KEY MESSAGE POINT: New technologies are in development to increase supply of non-HEU sources in the US; but those solutions are still years away.
In an effort to reduce reliance on non-domestic sources of medical isotopes, the U.S. Government is supporting a variety of development efforts. Three such projects are currently underway, with the goal of developing a non-HEU alternative (or alternatives) to traditional production processes.
While these initiatives are intriguing and exciting, they are still in early stages; none is yet commercially viable.
NOTE: Triad Isotopes is participating as a product testing partner with Northstar.
ADDITIONAL NOTES:
GTRI’s cooperative agreements are implemented under a cost share arrangement.
GTRI’s support to the total project cost of the cooperative agreement partners is up to $25 million each
To develop LEU Solution Reactor Technology
To develop Accelerator Technology
To develop Accelerator Technology with LEU Fission

8. New Technology Development
GLOBAL THREAT REDUCTION INITIATIVE
Two new contenders have recently joined the field of companies competing to develop non-HEU technologies to produce Mo-99 in the United States.

9. Tc-99m Radiolabelilng of Red Blood Cells
Recent Developments
Copyright © 2012 :: The University of New Mexico COP CE Office

10. Recent Developments

11. Challenges for Manufacturers
Extensive (and expensive) reactor conversions are underway, but will take until 2016 (or longer) to fully complete.
Current global supply of non-HEU based Mo-99 is limited.
Production of non-HEU based Mo-99 more expensive than HEU based Mo-99.
Production of non-HEU based generators must be done in separate production runs from HEU based generator production; no blends allowed by CMS rule.
Existing multi-year contracts with reactor operators irradiating targets and with Mo-99 producers.
KEY MESSAGE POINT: While the CMS reimbursement is welcome, there are still numerous challenges to address in the transition from HEU to LEU sources for Tc99m generators – which impact cost.
As this list illustrates, though the transition of reactors and processing facilities is underway to produce additional quantities of all of non-HEU Molybdenum, the conversion process is still years away from completion.
In addition to capital costs associated with facility conversion and construction, the need to segregate HEU from non-HEU production runs results in numerous redundancies and inefficiencies.
Needless to say – at least in the short term -- all of this adds up to limited availability and increased cost.

12. Challenges for Nuclear Pharmacies
Higher cost associated with non-HEU based Tc-99m passed on by manufacturers.
Limited number of non-HEU based Tc-99m generators available on weekly basis.
Need to segregate products, QC testing and labeling; will result in redundancy and loss of efficiency in the nuclear pharmacy.
Fluctuating prescriptions from eligible Medicare hospital outpatient procedures; will make purchasing correctly-sized generators complicated.
Concern over fraudulent reporting of non-HEU based Tc-99m doses.
KEY MESSAGE POINT: There are also numerous challenges and redundancies to address at the Nuclear Pharmacy level of the supply chain.
This list reflects some of the challenges for Triad Isotopes and other Nuclear Pharmacies as we work to convert our operations to handle both HEU and non-HEU dose preparation.
While we can assure you that we now have non-HEU products available to our customers, and that we have put procedures in place to address these challenges – these changes add up to increased cost and stricter requirements for customers ordering non-HEU sources doses.
The following should be expected:
Manufacturers require 6 weeks notice to order a generator; thus, Triad will require 6 weeks notice to initiate LEU service.
At least in 2013, LEU generators will only be available one or two days each week. As a result, Triad will dispense LEU product on Wednesday, Thursday and Friday only.
The final cost to the customer will depend on the quantity and product class of non-HEU products ordered.
A substantial, long-term commitment to ordering non-HEU products will allow Triad Isotopes to keep costs as low as possible.
At least in the early years of reactor conversion, non-HEU products will be available only with 24-hour advance notice. No return credits will be granted on LEU doses.

13. Challenges for Hospitals
Submit for a Medicare outpatient procedure in the hospital setting.
Schedule patients based on ability to obtain doses from a Tc-99m generator containing non-HEU based Mo-99.
Ensure non-HEU dose is ordered for and administered to Medicare-approved patient only.
Segregate non-HEU based Tc-99m from HEU-based Tc-99m.
Train coding personnel for the proper use of new “Q” code: Q9969
Account for higher cost associated with non-HEU based Tc-99m.
Account for higher administrative costs due to need to reflect both HEU and non-HEU based Tc-99m doses.
Maintain proper documentation required for CMS audits.
KEY MESSAGE POINT: There are also challenges to address within the Hospital. Triad will work alongside our customers throughout the transition.
From new coding and auditing requirements at the administrative level;
….. to identifying new procedures for segregating non-HEU products for use with Medicare patients;
….. there are a multitude of challenges to address for hospitals who order LEU products.
Triad Isotopes is committed to helping you navigate this new world, which now includes two kinds of Technetium doses.
We offer resources for billing and coding support through our partnership with MedLearn Publishing, and we will continue to provide updated information as it becomes available on an ongoing basis.

14. Connection to Affordable Care Act
Timing of CMS ruling coincidental.
Transition to non-HEU sourced nuclear medicine products is driven by Department of Energy and Homeland Security policy; unrelated to Affordable Care Act, which took effect in 2014.
Indirect and positive correlation for the nuclear medicine industry: Implementation of a healthcare system that increases the number of Americans with insurance coverage and expands access to care is expected to increase demand for imaging and other diagnostic tests.
KEY MESSAGE POINT: The drive to transition medical radioisotopes from HEU to LEU sources is not connected to the Affordable Care Act.
The timing of the CMS ruling and reimbursement is coincidental with passage of the Affordable Care Act.
However, we do expect that the implementation of “Obamacare” will have an impact on our industry, specifically:
More Americans with insurance coverage will equate to more Americans with access to imaging and other diagnostic tests.
That is good news for the nuclear medicine industry.

15. Implementation Timeline
2004
NNSA launched Global Threat Reduction Act; goal to convert reactors from HEU to LEU.
2010
- 2011
49 nations commit to pursue reduced use of LEU.
U.S. Bill introduced to support production of molybdenum-99 for medical uses in US.
2012
CMS announces $10/dose reimbursement for radiopharmaceuticals derived from non-HEU sources; available beginning January 2013 for Medicare hospital outpatients only.
GTRI funds partner agreements for new technology development in US.
2013
President Obama signs America Medical Isotope Production Act into Law.
CMS reimbursement available to Medicare Hospital Outpatient doses.
Limited supply of non-HEU products available through Triad Isotopes and other US nuclear pharmacies.
2016
Manufacturers anticipate full conversion of reactor facilities to LEU production capability.
KEY MESSAGE POINT: The transition from HEU to non-HEU alternatives is underway. Over time there will be ample supply of non-HEU sourced Tc99m.
This slide summarizes where we are and where we are going.
The transition is underway, and there is no turning back.
Short term, supply of non-HEU sourced doses will be limited and cost will be substantially higher than their HEU sources counterparts.
Long term, a fully adequate supply of non-HEU material will be available. How, when and if the increase in availability will lower the cost of LEU doses is still unknown.
Triad Isotopes is ready and able to provide non-HEU sourced radiopharmaceuticals as soon as you are ready to order.
We will work closely with you to understand the administrative expectations and handling procedures necessary as our industry undergoes this important transition.

16. What Lies Ahead?

17. Q & A
REFER TO FAQs TO PREPARE TO RESPOND TO Q&A.