Tuesday, February 05, 2008

Isotope "Crisis" Profit Motivated: Canadian Medical Association Journal

Whooee! Well friends an' foes, the Canadian Medical Association (CMA) is blowing the lid off the December isotope "crisis." A new article in the association's Journal (CMAJ) describes how MDS Nordion and AECL duped Canadians and Parliament. They couldn't have done it alone, though. MDS had help. Big help. Prime Minister Stephen Harper.

Quite a few bloggers have picked up on this story, including POGGE, The Galloping Beaver (TGB), Impolitical, Accidental Deliberations (Jurist) and Canadian Cynic. Like last week's revelation that the "crisis" was no crisis, at all, the CMAJ article is echoing and lending authority and credibility to what some Canadian bloggers have been saying for weeks.

There was no need for an isotope shortage. There was no need to restart NRU. There was no need for Harper to mislead Parliament and all Canadians about the cause of the shortage. There was no need for Harper to fire the nuclear regulator.

By way of patting myself on the back and telling my thousands an' thousands of readers how prescient ol' JimBobby was, I'm gonna quote myself. Here's what I said back on December 18th:
MDS is the profitable private company that distributes AECL's isotopes. On Nov 30, MDS issued a press release advising investors that the company was facing a supply problem and shortages may develop. Such reporting is required for publicly traded companies when a known issue may affect stock price.

Lives were put at risk. A full-blown crisis was manufactured and Harper, et al, saw no other option than to overrule CNSC and restart NRU. There were other options but they were apparently unknown to parliament.

If MDS had outsourced, no crisis would have developed. If MDS had outsourced, MDS's stock price would be negatively affected. Outsourcing from suppliers who are working overtime to meet demand is expensive. MDS's customers are mainly in North America. Flying isotopes from Holland or South Africa is expensive. Transportation costs would have would cut further into MDS's profits.

MDS played its cards skillfully. They created a shortage. They failed to notify all the affected parties. They failed to procure available alternative isotopes. They put thousands of lives at risk. They got Parliament to restore their source of profitable isotopes.
(Source: JimBobby, Dec. 18, 2007)
Here's some of what the CMAJ article says:
Although the health care implications of the Chalk River kerfuffle are serious, the many headlines declaring a world-wide isotope shortage may have been premature, if not errant. Countries like Canada, the United States and Japan were facing shortages that would have resulted in thousands of cancelled diagnostic and therapeutic procedures, but it was business as usual for European nuclear medicine practitioners.

Europe’s 2 large-scale isotope suppliers — the Nuclear Research and Consultancy Group in the Netherlands and the Institut National des Radioéléments in Belgium — coordinate their production schedules to ensure 1 reactor is always running. They also have open communication with Nuclear Technology Products in South Africa. Some in the international nuclear medicine community claim that foreign producers could have buoyed the North American supply chain, had Canada been a better global partner.

“The 1 problem we have is that we never get information from the Canadians,” says Kevin Charlton, commercial manager for business development and sales with the Nuclear Research and Consultancy Group.

Canadian Society of Nuclear Medicine President Dr. Jean-Luc Urbain claims foreign isotope producers were not capable of picking up the slack. But others, like University of Texas public affairs professor Alan J. Kuperman, argue MDS Nordion has no interest in international contingency planning.

“They see themselves as the big dog. They are not going to share information with the small ones nipping at their heels.” “There is all sorts of surplus capacity,” says Kuperman. “Nordion and AECL [Atomic Energy of Canada Ltd.] obviously knew there was an option of going to other suppliers … Instead, they went to the public and the Canadian government. That was misleading and, one could argue, socially irresponsible.
(Source: CMAJ [pdf], emphasis mine, JB)
Socially irresponsible. They could have coordinated efforts with alternative suppliers. They could have prevented the shortage from developing and they did not.

AECL and MDS Nordion, with the help of Prime Minister Harper, Natural Resources Minister Gary Lunn and Health Minister Tony Clement, pulled the wool over the eyes of the public and the eyes of 100% of Canadian MP's.

Why was the shortage manufactured? Profit, pure and simple.

As I said seven weeks ago, MDS's bottom line was at risk if they had to outsource isotope production. They played a dangerous game that put 1000's of medical tests on hold and could have cost lives.

MDS's point man was Stephen Harper. Harper's bluster, exaggerations, crisis mentality and partisan bullying was essential to the scam. Without Harper's representation in the House, MDS would have had to own up to its part in creating a life-threatening shortage for the sake of profit.

Harper did his job. The job he did was not on behalf of Canadians or even on behalf of all cancer patients expecting diagnostic tests. The job that Harper did was to ensure that MDS's cheap supply of medical isotopes was restored. Harper's job was to ensure MDS's profits did not suffer. The suffering of cancer patients? That takes a backseat to the profit-driven medical industry.

Underlying all this, is the Harper government's unabashed desire to sell off AECL. Other influential factors include the fact that the Maple 1 & Maple 2 reactors are "duds." MDS and AECL have managed to jointly get the Maples 8 years behind schedule and over $400 million over budget. That's not exactly shocking in the nuclear industry where massive cost overruns and multi-year delays are pretty much the norm. What is shocking, however, is the idea that these replacements may never go into service.

In 2007, officials at the federal agency predicted it would cost the public purse another $130 million to get the new reactors in service.

But senior government sources say the figure is closer to another $400 million, bringing the total cost to around $900 million -- an overrun of about 650% from the original contract price.

"There is no way those (reactors) make any economic sense for commercial isotope production," says one federal official close to the situation.

"Taxpayers would be subsidizing them forever."

Sources also warn that even investing $400 million more would not guarantee the reactors would actually work.

The biggest technical problem, in simple terms, causes the nuclear reaction to speed up as the reactor speeds up, creating a cycle of ever increasing power that may not have a happy ending.

Atomic Energy officials argue that the problem is only slight, and can be rectified.

But one federal official points out the world has already seen the phenomenon in action once, albeit on a far larger scale than anything that could occur at Chalk River.

"It was called Chernobyl."
(Source: Greg Weston, Toronto Sun, Feb 1, 2008)
Weston devotes most of his article to blaming 13 years of Liberal mismanagement for AECL's problems. I won't argue with that. Weston focuses on the problems with the Maples fails to mention anything about the manufactured and avoidable nature of the December shortage. He does reveal some interesting facts concerning MDS's profitability.

MDS would own the reactors, and Atomic Energy would get a share of the proceeds from the sale of medical isotopes across Canada and around the world.

But by 2005, costs had spiralled out of control, and still the Maple reactors were plagued with technical and other problems.

In 2006, after a lengthy legal fight with Atomic Energy, MDS Nordion did something that should have sounded alarm bells about the reactors.

The company simply wrote off the staggering $345 million it had invested in the Maple reactors, and handed Atomic Energy the keys -- and all future financial responsibility for the project.

In return, MDS got a guaranteed 40-year supply of isotopes.

MDS Nordion's share price went up on the announcement.
(Source: Greg Weston, Toronto Sun, Feb 1, 2008)

And as we're all finally learning, everything about the AECL/MDS relationship is about profit: share prices. Note that after a legal battle, AECL guaranteed a 40 year supply of isotopes. Just how are we (yes, we taxpayers own AECL) supposed to honour that legally binding agreement? Will we be running NRU when it's 90 years old?

Here's the question Canadians need to ask:

Were Harper, Lunn and Clement dupes? Or were they duplicitous?

I'm going for the latter.

Harper, Lunn, Clement and AECL/MDS conspired to trick the public and Parliament. For profit. Like the guy said in the CMAJ article, the engineered crisis was misleading and socially irresponsible. I'd call that the antithesis of public service. Harper et al scammed Parliament and they scammed all Canadians. They must be called to account.

Change the climate in Parliament.


UPDATE: MDS Nordion is paying attention to what the blogs are saying.


Anonymous said...

Question: Why couldn't the health care providers in America find another seller?

JimBobby said...

Why couldn't the health care providers in America find another seller?Apparently, many US users were able to get alternate supplies. The idea that this was a "life or death" crisis was mainly played up by Harper et al.

Under the AECL-MDS Nordion contract, the Canadian taxpayers are funding a money-losing supplier who provides underpriced isotopes to a money-making private company. This arrangement has helped MDS secure the lion's share of the international market.

Other providers were ready to up their production and there was no real shortage in Europe.

Shelf-life considerations do complicate matters for American users. The alternative suppliers are based in Holland, Belgium and South Africa.