value added by the production step, plus any product delivery costs. The premium represents the producer’s gross profit for selling the article.
The committee initially set out to develop cost estimates using this business approach. Accordingly, costs for Mo-99/Tc-99m through the supply chain (Figure 3.5) were defined as follows:
Mo-99 producer. The cost of producing Mo-99 includes the fixed costs for constructing the Mo-99 production facility and that portion of the reactor that is attributable to production. The variable costs include both direct expenses for production (e.g., materials, labor, facilities, and services) and indirect expenses (e.g., facility maintenance, safety, and security) that are attributable to production.
Tc-99m generator producer. The cost of producing a Tc-99m generator includes the gross cost of the Mo-99 (i.e., the price paid by the technetium generator producer for the Mo-99 plus any delivery charges) plus the fixed and variable costs associated with producing the generator.
Radiopharmacy, hospital, or clinic. The cost of producing a Tc-99m dose includes the net cost of the Tc-99m generator (i.e., the price paid by the radiopharmacy or hospital for the Tc-99m generator, plus any associated delivery charges, minus any refunds2 received by the radiopharmacy or hospital when the generator is returned to the producer) plus the fixed and variable costs associated with producing the dose.
Patient. The cost for the Tc-99m dose used in the medical isotope procedure includes the cost of the Tc-99m dose to the hospital plus any hospital costs associated with preparing and administering the dose.
As the study progressed it became clear to the committee that this approach was impractical for several reasons. First, the committee was not able to obtain detailed cost/price breakdowns for production because companies consider this information to be proprietary.3 Second, some of the fixed costs for producing Mo-99, especially the construction of reactors used to irradiate targets, were borne decades ago by state-owned entities. Reactor construction is expensive, and nobody knows what portions of these costs are attributable to Mo-99 production.
Finally, and perhaps more important, the committee came to understand that there is no single cost or price for Mo-99/Tc-99m at any point in the supply chain. The costs to Mo-99 producers are different because they are located in different countries, operate under different currencies, and