Dec. 1 (Bloomberg) -- Novartis AG’s malaria pill works and is safe, regulators said, suggesting the drug may be the first cleared for sale in the U.S. under a new program to encourage development of tropical-disease medicines.

Coartem, a 10-year-old medicine used worldwide, is being studied by the Food and Drug Administration for approval. The FDA says tourism and military operations may spark domestic cases of malaria, which has all but disappeared in the U.S. The agency has promised a voucher to speed review of some other medicine with greater commercial promise every time a drugmaker wins approval to treat one of 16 tropical diseases.

Getting a future drug on the market faster may add as much as $500 million to sales, according to Tadataka Yamada, formerly chief of research for GlaxoSmithKline Plc and now head of the Bill & Melinda Gates Foundation’s Global Health Program. The FDA staff, in assessing Coartem, said most of the side effects seen in studies of the drug are symptoms of malaria.

“The most frequently reported nervous-system disorder adverse events were identical in adults and pediatrics, namely headache followed by dizziness,” according to a review by the FDA staff posted on the agency’s Web site today. “These were likely symptoms of malaria.”

An FDA advisory panel will meet in two days in Rockville, Maryland, to discuss whether Coartem should be cleared in the U.S.

American depositary receipts of Novartis, each representing one ordinary share, fell $1.77, or 3.8 percent, to $45.15 at 4:03 p.m. in New York Stock Exchange composite trading, amid a general market decline. The Basel, Switzerland-based drugmaker’s receipts have fallen 17 percent so far this year.

1 Million Deaths

Malaria struck an estimated 247 million people in 2006, causing almost 1 million deaths, mostly in children in sub- Saharan Africa, according to the World Health Organization’s 2008 malaria report. The disease has been eradicated in the U.S. since the early 1950s, though more than 1,300 cases of the disease contracted in other countries were reported in the U.S. in 2002, according to the Centers for Disease Control and Prevention’s Web site.

The mosquito-borne illness causes fever, chills and flu- like symptoms. Coartem, a combination of two antibiotics, is taken orally in six doses over three days. It would be the first malaria treatment approved by the FDA that is derived from artemisinin, a plant-based chemical.

“With increasing international travel, the numbers of patients with malaria returning to the United States from endemic countries is set to increase; particularly as increasing drug resistance” occurs with the most dangerous strain of malaria, Novartis said in documents posted today on the FDA’s Web site.

Approved in 83 Countries

The company said it has provided more than 195 million Coartem treatments for use in Africa. The drug is more than 96 percent effective and is approved in 83 countries. In July, the William J. Clinton Foundation, based in New York, agreed to offer subsidies to artemisinin suppliers in India and China to cut the price of malaria drugs.

Coartem costs no more than 91 cents a treatment, the foundation said. Novartis has never made a profit from the drug, Chief Executive Officer Dan Vasella said at the time.

The FDA granted an expedited review to Coartem and is scheduled to act on Novartis’s application by the end of the year. The vouchers apply to medicines submitted after September 2007 and can be transferred to another drugmaker, according to draft guidelines for the new program that were issued in October.

The agency asked its advisers meeting this week to consider whether Coartem appears to be safe and effective and whether any additional studies should be required before or after approval. The FDA usually follows the recommendations of its panels, though it isn’t required to do so.

To contact the reporter on this story: Catherine Larkin in Washington at clarkin4@bloomberg.net.

Last Updated: December 1, 2008 16:17 EST