Socially Responsible Research Finds Ways to Improve Malaria Medicine Supply Chain

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Author Information : Burak Kazaz (Whitman School of Management, Syracuse University)
Scott Webster (W.P. Carey School of Business, Arizona State University)
Prashant Yadav (William Davidson Institute Ross School of Business & School of Public Health, University of Michigan)

Year of Publication : Academy of Management (forthcoming)

Summary of Findings : The authors develop a model of the artemisinin supply chain, calibrate the model using field data and investigate the impact of various interventions. The model shows that initiatives aimed at improving average yield, creating a support-price for agricultural artemisinin and a larger and carefully managed supply of semi-synthetic artemisinin have the greatest potential for improving supply and reducing price volatility of artemisinin- based malaria medicine.

Research Questions : What interventions will have the highest positive impact in treating malaria?

What we know : The World Health Organization (WHO) reports that there were about 219 million cases of malaria in 2012 leading to at least 660,000 deaths. The vast majority of these deaths occurred in sub Saharan Africa, and a large fraction of them are children under five, pregnant women and malnourished people.

Due to significant levels of resistance against the widely-used drugs such as chloroquine and sulfadoxine pyrimethamine (SP), WHO has been recommending artemisinin combination therapy (ACT) as first-line treatment for malaria since April 2002 (WHO 2012). Unlike previously used drugs to treat malaria, ACTs are manufactured from a starting material derived from a plant, Artemisia annual.

The yield of Artemisia varies greatly year to year due to environmental factors and weather; farmers make decisions on whether to grow it or a more stable cash crop, such as corn. This contributes to great uncertainty in the supply chain and, thus, uncertainty in the supply for malaria medicine.

This work responds to the needs of multilateral agencies and philanthropic organizations that are considering and pursuing interventions that affect the availability and price of ACTs and its main ingredient artemisinin. These organizations would like to know where to invest their time and effort in order to create the highest positive impact in treating malaria.

Novel Findings : In this paper, the authors develop a model of the supply chain that captures the effects of such factors as available farm space, farmer’s self-interest, volatility in crop yield, volatility in demand, and the introduction of semi-synthetic artemisinin on such measures as the level and volatility of medicine price and supply.

The researchers calibrate the parameters and functions of their model using data from the field and they investigate the impact of various interventions. Some of these interventions are under consideration by the global agencies and others are new areas of focus that are exposed through our analysis. The main conclusions are that initiatives aimed at improving average yield, creating a support-price for agricultural artemisinin, and a larger but carefully managed supply of semi-synthetic artemisinin have the greatest potential for improving supply and reducing price volatility of artemisinin-based malaria medicine.

Implications for Policy: This research shows that initiatives that improve average yield, create a support-price for agricultural artemisinin and a larger and carefully managed supply of semi=synthetic artemisinin have the greatest potential for improving supply and reducing price volatility of artemisinin-based malaria medicine.

Implications for Society: Having a more stable supply chain for critical medications, such as malaria helps the overall health around the globe. Interventions can be applied for other critical medications during emergency situations, such as refugee assistance and natural disaster response.

Implications on Research: This paper also highlights the application of modeling and analytical tools to address policy-relevant problems faced by developing-country governments. Further research should seek to understand the dynamic behavior of the system in response to an intervention and the role of information asymmetry in this supply chain. In addition, future research may model extractors as a separate entity in order to assess the impact of extractor strategic behavior such as price gouging or constraining supply.

Full Citations : Kazaz, B., S. Webster, P. Yadav. 2016. Interventions for an Artemisinin-based malaria medicine supply chain. Forthcoming at Production and Operations Management.

Abstract : Artemisinin combination therapy, the most effective malaria treatment today, is manufactured from an agriculturally derived starting material Artemisia annua. Artemisinin, the main ingredient in malaria medicines, is extracted from Artemisia leaves and used in the production of medicine for treating malaria. The artemisinin market has witnessed high volatility in the supply and price of artemisinin extract. A large fraction of malaria medicines for endemic countries in sub Saharan Africa is financed by the Global Fund to Fight AIDS, TB, and Malaria and the US President’s Malaria Initiative. These agencies together with the World Health Organization, UNITAID, the United Kingdom Department for International Development and the Bill and Melinda Gates Foundation are exploring ways to increase the level of artemisinin production, reduce volatility of artemisinin prices, and improve overall access to malaria medicines for the population. We develop a model of the supply chain, calibrate the model using field data, and investigate the impact of various interventions. Our model shows that initiatives aimed at improving average yield, creating a support-price for agricultural artemisinin, and a larger and carefully managed supply of semi-synthetic artemisinin have the greatest potential for improving supply and reducing price volatility of artemisinin- based malaria medicine.

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Burak Kazaz

Burak Kazaz

Professor Kazaz is The Steven R. Becker Professor of Supply Chain Management, The Laura J. and L. Douglas Meredith Professor and professor of supply chain management. His research interests include the integration of operations (purchasing, production, distribution), marketing (pricing, market segmentation) and finance (managing economic/currency risks, hedging), with a special interest in managing uncertainty and risk in global supply chains.
Burak Kazaz
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