Supply of Covaxin to Centre at Rs 150 per dose not sustainable in long run: Bharat Biotech

Amidst a debate over high prices of Covid19 vaccines in the private hospitals, vaccine manufacturer Bharat Biotech has said that the rate at which it was supplying Covaxin to the government was “not sustainable in the long run”, and a differential price in the private markets was justified to “offset parts of the costs”.

In a detailed statement over the pricing of Covaxin, the Hyderabad-based manufacturer said that despite the differential pricing, the company was only realising a weighted price of “less than” Rs 250 per dose. Claiming that it had so far invested over Rs 500 crore “from its own resources” to develop the vaccine, Bharat Biotech argued that innovating companies like itself should be allowed to maintain differential pricing for government and private markets, because low product prices constrained innovation and “dispirits domestic research and development”.

The company said the bulk of its supplies in the near future would continue to go to the government, which has been buying the vaccine at Rs 150 per dose. Only 25 per cent of its supplies would be channeled to private hospitals, it said.

“As directed by the government of India, less than 10 per cent of our total production of Covaxin to date has been supplied to private hospitals, while most of the remaining quantity was supplied to state and central governments. In such a scenario, the weighted average price of Covaxin for all supplies realised by Bharat Biotech is less than Rs 250 a dose. Going forward, approximately 75 per cent of the capacity will be supplied to state and central governments, with only 25 per cent going to private hospitals,” the company said in a statement.

It said the higher price in private markets was “purely due to fundamental business reasons, ranging from low procurement volumes, high distribution costs and retail margins”.

“The supply price of Covaxin to the government of India at Rs 150 per dose is a non-competitive price and clearly not sustainable in the long run. Hence, a higher price in private markets is required to offset part of the costs,” it said, giving examples of other pharmaceutical products which are available at differential pricing.

“There are live examples of such pricing policies where Human Papilloma virus vaccine is priced for GAVI supplies at approximately $4.5 (about Rs 320) per dose, but is also available in the private market at about Rs 3,500 per dose. Rotavirus vaccines are supplied to the government of India at about Rs 60 per dose, but it is also available in the private market for Rs 1,700 per dose. The prices of Covid19 vaccines internationally have varied between $10 and $37 (about Rs 730 to Rs 2,700) per dose,” it said.

The company also said that the procurement of vaccines by private hospitals was only an additional choice. “Unlike most medicines and therapeutics, vaccines are provided free of cost by the government of India to all eligible Indian citizens. Thus, the procurement of vaccines by private hospitals is optional and not mandatory, albeit it gives a choice to citizens who are willing to pay for better convenience. In our view, the question of product pricing is only of extraneous interest to all concerned, especially when the same vaccine is made available free of cost,” the company said.

Covaxin was developed by Bharat Biotech in collaboration with Pune-based National Institute of Virology, a government laboratory under the Indian Council of Medical Research. The Hyderabad-based company said support from ICMR was with respect to provision of the virus, animal studies, virus characterization, test kits and partial funding of clinical trial sites.

“In return for this valuable support, Bharat Biotech will pay royalties to ICMR and the National Institute of Virology (NIV), based on product sales. Royalties are also payable to Virovax towards the licensure of IMDG agonist molecules,” it said.

The company said it was investing in new facilities and repurposing existing ones across several states in India for enhancing the production of Covaxin. “It is pertinent to mention here that the urgent need to set up a significant number of manufacturing facilities and to divert existing ones for Covaxin resulted in reduced production of other vaccines at our facilities, leading to loss in revenues,” the statement said.