Deal Seeks to Provide Malaria Medicine at Low Prices

Donald G. McNeil Jr. | 18 Jul 2008
New York Times

The Clinton Foundation announced Thursday that it had brokered an agreement among several drug makers that it hopes will assure a steady supply of a crucial malaria medicine at reasonable prices for the world's poor.

The foundation, created by former President Bill Clinton, is trying to control spikes in the price of artemisinin, the derivative of the sweet wormwood plant that Chinese scientists turned into the latest miracle drug against malaria.

In 2004, when international donors agreed to pay for artemisinin-based drug cocktails, the price of the raw material soared. In a year, it had more than quadrupled, to about $500 per pound from about $115 per pound. (At the time, pharmaceutical executives in China blamed hoarding by the farmers supplying them.)

Novartis, then the only company with an artemisinin-based drug approved by the World Health Organization, absorbed the losses, and generic drug makers were scared away from the field.

But by 2006, after farmers rushed to plant more sweet wormwood and pickers gathered it in the wild, the price had plummeted to about $70 a pound; it has remained in that range since then.

The complex deal announced Thursday includes two Chinese suppliers of artemisinin, two Indian companies that process it into derivatives like artesunate, and two more Indian companies, Cipla and Ipca Laboratories, that produce finished pills.

The Chinese companies have agreed to supply artemisinin at a ceiling price of no more than $136 a pound, explained Dai Ellis, the foundation's executive vice president for access programs. The drug makers have agreed to buy at that price, but are free to buy elsewhere if they can find it for less than about $125 a pound. In return, they will sell their products on at agreed-upon low wholesale prices.

At the moment, with global artemisinin prices well below those levels, the ceiling is "irrelevant," Mr. Ellis said. "Capitalism takes over."

However, he said, the Global Fund for AIDS, Tuberculosis and Malaria, the President's Malaria Initiative and other donors may soon start subsidizing private-market purchases of such drugs. (In most poor countries, people buy malaria drugs at private pharmacies and roadside shops, while AIDS and tuberculosis drugs are distributed by public hospitals.) Subsidized prices could create new demand, sending prices up again.

It is unclear how much control over the market the arrangement will create. Wormwood is also farmed in Vietnam and Tanzania and grows wild around the world. When prices soared, plans were announced to grow it in South Africa and elsewhere, and to make synthetic versions.

Mr. Ellis said the foundation hoped to sign up more suppliers.

The Clinton Foundation also announced that Cipla and Ipca would produce a new artemisinin-based combination, artesunate plus amodiaquine, for about 30 percent less than the prevailing market price. The new combination was deliberately not patented by Sanofi Aventis, the first company to market a version approved by the W.H.O. Novartis's earlier product combines artemisinin with a different drug, lumefantrine.