Can Markets Cure Malaria?

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With the financial markets in meltdown and the presidential campaign in smackdown, it would be understandable if you weren't thinking about malaria right now. But right now is malaria's moment.

Last month, world leaders gathered at the United Nations and announced a record-breaking assault on the world's worst disease. They pledged almost $3 billion over two years in hope of reducing annual deaths from a million to zero by 2015. Zero malaria deaths any time soon is pie in the sky, but no one doubts that many, many lives can be saved at a relatively modest cost. We know how to prevent and treat malaria, which is why it's no longer a problem in the United States.

In the developing world, success has been more elusive. Plasmodium is an ancient parasite that has spent tens of thousands of years evolving to make humans miserable. In 2006, the World Health Organization recorded about a quarter of a billion malaria cases (six-sevenths of them in Africa) among an at-risk population of about 3.3 billion (half of humanity).

Until recently, the parasite's very ubiquity afforded it some protection. In many countries, malaria was regarded as a fact of life. "People seemed to be complacent -- asleep at the wheel," says Richard Tren, the director of Africa Fighting Malaria, a public health advocacy group.

Within the past few years the picture has changed. "There's certainly a lot more money in malaria control now than there has been in the last 20 to 30 years," Tren says, "and there's a lot more political will."

Commitments from the WHO, big donors such as the Bill & Melinda Gates Foundation, and world governments have provided momentum. Even people who like nothing else about George W. Bush praise the President's Malaria Initiative. Launched in 2005 with a five-year budget of $1.2 billion, the program has brought "new energy, higher budgets, and a new kind of daring" to the cause, Tren says. Indeed, Congress recently increased the initiative's budget and, in April, created a Malaria Caucus -- a sure sign of the disease's political arrival.

Never, in short, has the world had so much will to tackle malaria. But is there a way? Maybe.

Next month, the Global Fund to Fight AIDS, Tuberculosis, and Malaria -- a major conduit for anti-malaria spending -- will decide whether and how to commit to a program regarded by advocates as a breakthrough, but by skeptics as a leap in the dark. The program is called AMFM. Though activists sometimes jokingly call it "Radio Malaria," the acronym stands for Affordable Medicines Facility-Malaria.

To wipe out malaria, you have to treat it with drugs that kill the parasite. But drugs gradually provoke resistance. The last big campaign to wipe out malaria, in the mid-20th-century, faltered when resistance rendered the drug of choice, chloroquine, virtually useless. The next drug lost effectiveness even faster.

Only one viable anti-malarial drug remains: artemisinin, a plant derivative that works superbly -- right now. Hints of resistance have appeared in Southeast Asia, however. If artemisinin loses its efficacy, years or even decades might pass before a successor is found.

Resistance can be greatly slowed if artemisinin is combined with partner drugs. Combination therapy forces the parasite to find keys for two or three locks simultaneously, which is difficult even for a clever protozoan. Health authorities now say that artemisinin should be dispensed only in combination form, never alone.

But anti-malarials are generally dispensed through private markets, not public clinics. In many places, people buy medicines in shops or stalls. Combination drugs are relatively expensive, so individuals in poor countries are likely to buy cheaper monotherapies instead. The more people buy monotherapies, the faster artemisinin will lose its effectiveness. Banning or restricting the sale of monotherapies can help, but only up to a point, because developing countries often have weak regulators and thriving black markets.

In short, malaria today is as much an economic challenge as a medical one: a classic instance of what economists call a coordination problem (all suffer if each pursues his individual interest). Six years ago, the Institute of Medicine at the National Academy of Sciences called in an economist to help.

Kenneth Arrow, a Nobel Prize-winning pioneer of public-choice economics (which analyzes market failures), headed an institute committee that recommended exploiting price incentives instead of fighting them. That is, subsidize combination therapy to the tune of about 95 cents on the dollar, reducing its cost by a factor of 20. Subsidies would make combination therapy the cheapest treatment out there, displacing monotherapies and ineffective drugs such as chloroquine.

"The public health community has tended not to see the private sector as part of the solution," says Ramanan Laxminarayan, an economist with Resources for the Future, an environmental think tank in Washington. "They've always been more comfortable with command-and-control." By operating through prices and markets instead of mandates, he argues, AMFM represents a conceptual breakthrough.

Next month, at a board meeting in New Delhi, the Global Fund will decide whether to commit to AMFM, and on what scale to finance it. Because malaria is so pervasive, AMFM wouldn't come cheap. Saturating the global market with subsidized combination therapy could cost almost $2 billion over five years, according to the Roll Back Malaria Partnership, a group that advocates the approach. A more gradual adoption would still cost on the order of $100 million a year, Laxminarayan estimates.

He and other AMFM advocates argue for starting as big as possible, as soon as possible. "This is something you can't do in a halfhearted way," he says. "You've got to go in and flood the [world] market. Flooding the market in one country isn't enough." He adds, "It's already been held up for too long. We're losing lives, and we're losing the drugs. But for the United States, this might have proceeded on a much larger scale."

This is the moment to mention that there are no bad guys in this story. Everyone wants to fight malaria. But against the economists is ranged a cluster of skeptics. Or realists, as they see themselves. Their number includes American policy makers.

"Ramanan may very well have a good point here, but it's an untested point," says Bernard Nahlen, the deputy coordinator of the President's Malaria Initiative (and a physician with 20 years of malaria experience). "The U.S. government has been consistent from day one on this, which is, there needs to be some evidence for this. You have to go to a few countries and try this out and see if it's going to work. Nobody has all the answers to this. To propose one particular model to solve all these problems, I think, is going far out on a very thin limb."

The realists think that the economists are naive about real-world markets. Only one test of AMFM's approach has been conducted so far -- in Tanzania -- and its results were encouraging but inconclusive. "I just don't think we understand these markets very well," says Roger Bate, a malaria expert at the American Enterprise Institute. "It's incredibly varied, what's out there."

The subsidy could be skimmed by corruption or leached by inefficiency, never reaching the people it is designed to help. The end result might be a windfall for middle-class people who are buying combination drugs already. Worse, making combination therapies the cheapest thing available could lead to rampant overuse for illnesses from anemia to flu. AMFM's blank-check subsidy could turn into an expensive global entitlement program that yields disappointing results, souring the international community on anti-malaria efforts just when enthusiasm is most needed. With millions of African children still lacking mosquito nets, AMFM could prove a costly diversion.

"There is an opportunity cost for this if it doesn't go well," Nahlen says. Everyone agrees that AMFM should be tried, but Bush administration officials and other skeptics prefer a small, scientifically rigorous pilot program.

Curiously, the dilemma here bears a passing resemblance to the one that Congress faced last week in deciding to authorize $700 billion to buy bad mortgages. Wait too long, and we risk systemic damage that is much more costly to repair than to avoid; move too fast, and we may have an expensive failure on our hands.

With the Bush administration working to negotiate parameters it can support, the betting is that some version of AMFM will get the green light in New Delhi next month. In any case, however, two pieces of good news are already in the bank: The world has rediscovered malaria, and the public health establishment has embraced economics.

This article appeared in the Saturday, October 11, 2008 edition of National Journal.