Deal Seeks to Offer Drug for Malaria at Low Price

By DONALD G. MCNEIL JR
18 july 2008--The Clinton Foundation announced Thursday that it had brokered an agreement among several drug makers that it hoped would ensure a steady supply of a crucial malaria medicine at reasonable prices for the world’s poor.
The charity, created by former President Bill Clinton, is trying to control spikes in the price of artemisinin, a 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 more than quadrupled, to about $500 per pound from about $115 per pound. (At the time, pharmaceutical executives in China blamed farmers for hoarding the supply.)
The Swiss pharmaceutical maker Novartis, then the only company with an artemisinin-based drug approved by the World Health Organization, absorbed the losses, and makers of generic drugs 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.
The complex deal announced Thursday involves two Chinese suppliers of artemisinin, two Indian companies that turn it into active ingredients and two more Indian companies, Cipla and Ipca Laboratories, that produce finished pills.
The Chinese companies have agreed to supply artemisinin at a price of no more than $136 a pound, said 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 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, donors may soon start subsidizing private-market purchases of such drugs. (In most poor countries, people buy malaria drugs at private pharmacies and shops, while AIDS and tuberculosis drugs are distributed by public hospitals.) Lower prices could create new demand, sending prices of the raw material 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 Clinton Foundation hoped to sign up more suppliers.
It also announced that Cipla and Ipca would produce a new artemisinin-based combination, artesunate plus amodiaquine, for about 30 percent less than its prevailing market price.
Sanofi Aventis, the first company to market a version of this combination approved by the W.H.O., deliberately did not patent it. Novartis’s earlier product combines artemisinin with a different drug, lumefantrine.
Daniel Vasella, chairman of Novartis, said he was glad to have more competitors because, even at current artemisinin prices, his company lost 80 cents on each pill it made for public health agencies. With research and distribution expenses, he said, “It has cost us over $100 million.”