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In a sign that the debate on drug prices in the third world is shifting from AIDS to other life-threatening diseases, Novartis, the Swiss drug company, has agreed to cut significantly the price of a powerful medicine needed to fight malaria in Africa.

David Alnwick, who manages the World Health Organization's malaria efforts, said that Novartis had agreed to sell its drug, Riamet, to the W.H.O. for about $2 for a full treatment; in Western markets, the price is about $20.
Riamet, which is sold as Co-Artem in the developing world, is crucial to treating malaria because many strains of the disease have become resistant to the older and cheaper drugs. 

Riamet is a combination of two drugs — artemether, a traditional Chinese plant-based remedy, and lumefantrine, a synthetic substance — which has been shown to work in areas where the malarial parasites are resistant to other drugs.

Mr. Alnwick said the $2 price was still far above what most Africans could afford. "Two dollars is better than $20," he said, "but it is still far more than 20 cents." 

The older malarial drugs, including chloroquine, now cost Africans about 10 cents to 20 cents for a treatment, Mr. Alnwick said. But patients buying those drugs take a risk that they will not work.

Dr. Daniel Vasella, the chairman and chief executive of Novartis, confirmed last night, in a telephone call from Switzerland, that the company had agreed to sell the malaria drug to the W.H.O. at a price equal to the cost of producing it. Dr. Vasella said he could not immediately confirm the $2 price.

"I am totally committed to sell Co-Artem at cost," he said. "We will have zero profit."

Dr. Vasella said that he had told the W.H.O. a couple of months ago that he would sell the drug at cost, and that the company had been working out details of the price reduction with the Chinese company that is a partner with Novartis in producing it.

Malaria kills more than a million people each year, according to the W.H.O. The disease's main victims are young children and pregnant women. It also causes significant economic harm because it keeps adults from working.

In comparison, about three million people now die annually from complications from AIDS, according to the United Nations.

The major pharmaceutical companies have come under increasing pressure to reduce the prices of AIDS medicines and other life-saving drugs in developing countries. In the last two months, several drug companies, including Glaxo-SmithKline, Merck, Bristol-Myers Squibb and Abbott Laboratories, have offered to sell their AIDS medicines at substantially reduced prices in developing countries.

The United Nations and the W.H.O. are now trying to persuade governments, foundations and other donors to contribute to a new global fund aimed at combating AIDS, tuberculosis and malaria. In a speech last week, the United Nations secretary general, Kofi Annan, said he wanted to use the new fund to eventually add $7 billion to $10 billion a year to the current worldwide spending on these diseases.

Mr. Alnwick said that the W.H.O. first approached Novartis more than a year ago, asking the company to reduce Riamet's price to help battle the growing resistance problem. Riamet was first approved in Switzerland in 1999. It is not approved for use in the United States.

Mr. Alnwick said that the W.H.O. hoped eventually to buy Riamet and other malaria drugs with money from the new global fund. The organization is still working out how best to get the drug to patients in Africa, he said.
Riamet competes with another potent malarial drug called Malarone, which is sold by Glaxo-SmithKline. 

In a pilot project, Glaxo-SmithKline has been providing Malarone free to patients in Kenya and Uganda who have failed to improve by taking the older drugs.

The W.H.O. is also working with Glaxo-SmithKline to develop another drug for drug-resistant malaria called Lapdap. Under an agreement, both the company and the W.H.O. are paying for the clinical trials needed to show the drug is safe and effective.

Dr. Vasella said that he could not reduce the price of Riamet below the company's cost to produce it. He said the reduced price does not cover the costs of developing the medication. Drug companies must be allowed to charge prices high enough, he said, to cover the cost of finding and developing new medicines.

"It is extremely myopic if people push too far," Dr. Vasella said, "because it will backfire."