Clinton Foundation to stabilize prices of malaria drugs
29th July 2008
The New York City-based William J. Clinton Foundation ( http://www.clintonfoundation.org/ ) 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.