Clinton unveils deal to cut malaria drug prices

NEW YORK (Reuters) - Former President Bill Clinton unveiled a deal on Thursday with six Chinese and Indian companies to cut a key malaria drug price by a third and slash the price volatility of a vital ingredient by 70 percent.

Artemisinin-based combination therapies, or ACT drugs, are recommended by the World Health Organization because of growing resistance to older treatments such as chloroquine.

But the supply of artemisinin, a plant extract long used in Chinese medicine that takes up to 14 months to produce, has been volatile, with prices ranging from $150 to $1,100 a kilogram (2.2 lb) in the past four years.

"We have reached agreement with the suppliers at every level of the production chain from the extraction of the raw ingredient to the manufacturer of the final drug to allow for sustained and lower pricing," Clinton told a news conference.

The Clinton Foundation HIV/AIDS Initiative has struck deals with India's Cipla Ltd and IPCA Laboratories Ltd, which both manufacture ACT drugs, India's Calyx and Mangalam Drugs, which turn the plant extract into an active pharmaceutical ingredient, and China's Holleypharm and PIDI Standard, which grow the plants.

The lower prices will be available to the 69 countries in Africa, Asia, Latin America and the Caribbean who make up the foundation's purchasing consortium.

Cipla and IPCA have agreed to offer two of the most widely used ACT drugs at lower prices -- artesunate and amodiaquine at or below an average ceiling price of 48 cents per treatment, 30 percent below current market rates, and artemether-lumafantrine at or below an average ceiling price of 91 cents.

NO SINGLE PLAYER

Malaria, caused by a parasite carried by mosquitoes, infects between 300 million and 500 million people each year, killing more than 1 million of them, according to the World Health Organization.

Novartis AG is the dominant ACT drug supplier and the large Swiss company has been able to absorb the volatile costs of artemisinin rather than passing it on to patients. It said it has lost more than $100 million on the drug.

"We know first-hand addressing the health problems of the developing world is challenging and no single player can be successful," said Daniel Vasella, chairman and chief executive officer of Novartis.

Because of the price and supply instability of artemisinin, the foundation said few additional suppliers had entered the market because of the financial risks and if they did, they may not be able to shield patients from costs like Novartis has.

"With rapidly but unevenly growing demand -- and the prospect of a potential global ACT subsidy that could accelerate this growth dramatically -- the risk of volatility in the future remains high," the Clinton Foundation said.

International organizations and governments are considering a multimillion-dollar global subsidy plan for the ACT drugs.

The foundation said the agreements will help to mitigate risk so new suppliers can enter the market and current suppliers like Cipla and IPCA can expand their manufacturing.

The Clinton Foundation said that currently about 100 million doses of ACT drugs are distributed a year. It has forecast that demand for ACT drugs will at least double over the coming four years and could grow to more than 400 million doses annually if a global subsidy plan is agreed.

Malaria causes fever, vomiting, body aches, diarrhea, anemia, loss of concentration, delirium, convulsions, coma and eventually, death.

(Editing by Ellen Wulfhorst and Eric Walsh)