E-DRUG: Price reduction for antimalarial Coartem (2)
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Dear E-druggers,
We were interested to read the MSF posting on the Coartem price reduction, particularly the issue of competition and the supply of Artemisia annua. It was to good to hear that MSF welcomes this reduction and that they
believe it will lead to greater access. The posting also highlighted the
importance of price and availability of Artemisia annua as a key factor in increasing access to ACTs. It is this unheralded
aspect of Novartis' work, stabilizing and massively increasing the supply
of Artemisia annua, that we believe is one of the company's most important contributions to the fight against malaria.
The increase in the supply of this crucial plant and, the fact that the
price has now decreased significantly, did not just happen by accident.
Novartis, through its partners, has been providing thousands of farmers
throughout China and Africa with advanced milestone payments worth
millions of dollars to ensure that there is an adequate supply of the
crop. In short it is not competition but Novartis' investments that have
massively increased the global supply of Artemisia annua by providing farmers with incentives to grow this rather than other cash
crops ? and this increased supply has led to lower prices on the world
market. In fact produced 33 million treatments of Coartem in 2005 but
countries procured only 9 million treatments.
The difficulties of increasing cultivation of Artemisia annua, scaling up production capacity (from 4 million treatments in 2004 to
over 100 million treatments in 2006), managing a lack of orders whilst
providing 'not for profit' pricing all amounts to a massive financial risk
for any company. This risk is compounded by the short shelf life of ACTs
(only 2 years) making even short delays in ordering difficult to manage.
Clearly this is not a 'monopoly' in any meaningful sense with others
electing to 'wait and see'. Novartis has always believed that, given the
scale of the effort required, many partners need to be engaged.
The situation in 2006 is more positive. As a consequence of Novartis'
investments in the cultivation of Artemisia annua there is now an ample global supply for any manufacturer wishing to
produce ACTs. Countries have placed and received orders for 50 million
treatments of Coartem so far this year. This volume increase has enabled
the company to reduce the 'not for profit' price of Coartem. The hope must
be that with lower prices countries will place more orders so that more of
the 300-500 million malaria patients receive the medicine they need.
Novartis' Coartem price reduction includes a subsidy which is specifically
designed to kick start this kind of procurement behavior. Countries have
the funds at their disposal with which to place orders and by making these
orders more quickly and more predictably they have the ability to make the
manufacturing environment even more attractive for new entrants.
At the present time there are unprecedented levels of funding available
for the purchase of highly effective medicines for use in the fight
against malaria. Barriers to access remain and these are often the poor
healthcare infrastructures, complex finance arrangements and inadequate
supply chain management capabilities in countries. The global increase in
the availability of Artemisia annua and the recent price reduction of Coartem will not address all these other issues but it does demonstrate that innovative approaches can help advance the fight against diseases like malaria.
Silvio Gabriel Dr. Petra Laux
Executive Vice President Head, Global Public Affairs, a.i.
Malaria Initiatives Novartis Management Services
Novartis Pharma AG Rue Trone 108
Lichstrasse 35 1050 Bruxelles
CH-4056 Basel
Tel: 41 61 324 7132 Tel: 32 2 246 1972
Fax: 41 61 324 2146 Fax: 32 2 246 1996