Clinton Foundation to stabilize prices of malaria drugs

29th July 2008

The New York City-based William J. Clinton Foundation  ( ) has announced pricing  agreements with several suppliers involved in the production  of a malaria-fighting drug in an effort to stabilize the drug's  cost and ensure a more dependable supply. The Clinton Foundation established an HIV/AIDS initiative that  sought to negotiate lower prices for antiretroviral treatments  in 2002 and has since expanded the focus of the initiative to  include malaria treatments such as artemisinin-based combination  therapies, or ACTs. Artemisinin is an extract of the plant known  as wormwood or sagewort, and erratic changes in its availability  has been one of the factors driving the volatility of the drug's  price, which has fluctuated from $155 to $1,100 per kilogram in  recent years.
 The foundation has negotiated with two suppliers at three levels  of the production chain -- raw material, processing, and final  formulation -- who in turn have agreed to price ceilings that,  according to the foundation, will help keep prices relatively  stable and less dependent on fluctuating supplies of the extract. Besides benefiting from a more stable market, any suppliers that  join the effort will also get business and marketing assistance  from the foundation.

Every year, about five hundred million people are sickened by  malaria, and more than one million die from the disease. "Today's  announcement is an important step forward in global efforts to  increase access to affordable and effective malaria treatment," aid Clinton in a statement, "and I applaud the commitments of  these companies to lower volatility in this market and offer  low and sustainable prices that will save more lives."

The principle of pricing agreements with manufacturers is the same principle that underlies the Coalition's Minimum Volume Guarantee (MVG) mechanism that is currently being developed. Under the MVG, an agent (in this case UNFPA) gets an agreement for a low price for reproductive health (RH) supplies with a manufacturer as a consequence of the high volume it is ordering. Other organizations can then buy commodities, via UNFPA, at that cheap price. Once the MVG is working, the Coalition will effectively be doing the same thing as the Clinton foundation, but with respect to RH supplies.

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