Pricing issue of vaccine could not have been ignored

By DM Deshpande

There are no two opinions about the fact that the vaccination program holds the key for preventing rapid spread of the pandemic. Therefore, the government’s move to bring in all persons above the age of 18 within the ambit of vaccination drive needs to be welcomed.

In fact, there is some merit in the argument that this ought to have been done earlier. After all, this is a cohort group that is more mobile and therefore at high risk of contracting the virus.

So far, a smaller proportion of the population has been covered over a relatively spread out time period. But now the floodgates are going to be opened from May 1. Young population, below the age of 35, is about 65 per cent in India. In order to cater to the increase in demand, there has to be three-fold or more increase in daily production. This will certainly not happen overnight, notwithstanding the Prime Minister’s appeal to use all national resources to achieve the same.

The government has released Rs 3,000 crores to The Serum Institute of India (SII) and another Rs1,500 crore to Bharat BioTech, ostensibly the subsidy amounts for the vaccines purchased. It is aware of the emerging situation and has therefore decided to allow imports of vaccines from abroad. In addition, it has initiated efforts to allocate licences to foreign manufacturers to produce vaccines in India.

All this will help in ramping up domestic production and supply but with a time delay. This ought to have been planned about six months back. Then, we would have hit the ground running. While the west put in indents for purchase of vaccines well in advance, in fact, even before commercial production began, we did it much later after lapse of precious time. But for the initial hesitancy, vaccine supply could not have matched the demand in a vast populous country. Now with unprecedented rise in covid numbers, some states and urban centres have reported a shortage of jabs while others have wasted 23 per cent of the total.  

The government has done a good job of covering the vulnerable sections of the populace first by its vaccination program. The free administering of jabs will continue even in the third phase. As greater private participation is envisaged in the coming phase, it will free up resources of states and more importantly speed up the vaccination drive.

Even a very optimistic scenario puts a six months’ time frame to vaccinate large enough population numbers to achieve herd immunity. As per the new changes, manufacturers will have to sell 50 per cent of all their production to the central government and the remaining fifty percent to states and private hospitals. At the time of writing this column, there was no word from the government about the pricing of the vaccine. Since, flexibility in pricing is indicated, private manufacturers and analysts have put out some figures.

The SII has spelt out a differential pricing strategy, Rs 400 for per dose for state governments and Rs 600 for private hospitals. It has already been supplying to the central government at the rate of Rs150 per dose. Whatever happens to cooperative federalism, no one has time to think. It is pertinent to note that the central government had bought the vaccines at Rs 400 in the very early part of its drive.

As per reports, in private hospitals vaccines, depending on the variety, could cost between Rs 600 and Rs1,000.

At the core of the production and distribution of vaccines is actually the issue of pricing. Unfortunately, there has been no transparency in this matter. It is rather surprising that a public good and a life saving one has been allowed to levy discriminatory rates even amongst the governments. And only a naive will believe that the SII’s price announcements are without concurrence of the government, be it implicit. States are not on par as far as their financial health is concerned. Poor states generally have larger populations to support. If they cannot afford to buy vaccines, then what happens to the collective fight to combat the pandemic. No one is safe till everyone is covered.     

Shortage of vaccines is a manmade crisis. Otherwise, who would think that the nation which supplies over 60 per cent vaccines to the world is not in a position to meet the home demand! Things wouldn’t have come to this pass if a few issues were addressed early. One, it would have been prudent, ethical and sustainable for the government to have brought the intellectual property rights from the company. That would have boosted the production and also incentivised new vaccines development.

The government could have given compulsory license to manufacture to few more players. Going forward, the world is going to need more robust drugs and vaccines to fight new variants, strains et al.

Second, the issue of vaccine pricing. The government did not get it right, at least till now. Two dollars or thereabouts for an international product in great demand is a pittance. It may not even cover the operational costs, leave alone the question of thousands spent on research, trials and development. There was Rs 35,000 crores allocated in the budget. That should have been used to subsidize the purchases made for vulnerable and needy persons. It is important to pay a reasonable economic price, a basic fundamental of economics.

Too low a price and opaque government policy are formidable hindrance for ramping up production. Vaccinating the second largest population in the world is indeed a daunting task. Therefore, it is necessary to get everything right, the supply chain logistics, last mile delivery by the hospitals and above all the price and how each one shares the same.

The author has four decades of experience in higher education teaching and research. He is the former first vice chancellor of ISBM University, Chhattisgarh.