Context: 

• Central government has defended the differential pricing pattern adopted by vaccine companies Serum Institute of India (SII) and Bharat Biotech for their Covid-19 vaccines Covishied and Covaxin, respectively, for supply to the Centre, state government and private hospitals.   

 

More in news:

• Both the companies have been supplying their vaccines to the Centre for Rs 150 per dose. 
• However, for states, Serum and Bharat are charging Rs 300 and Rs 400, respectively, for a single dose of their vaccines. 
• For the private hospital market, Serum is selling a dose for Rs 600. Bharat Biotech has priced it at Rs 1200.
• In an affidavit submitted to the Supreme Court, the government said the difference in the  prices fixed for Central government, state governments and private market are because of the volumes sought by them. 

New vaccination policy

• From May 1, the supply will be divided into two baskets: 50 per cent for the Centre, and 50 per cent for the open market. 
• Through the second channel, state governments, private hospitals, and industries that have facilities to administer the vaccine, will be able to procure doses directly from manufacturers.
• The 50 per cent basket of vaccine doses earmarked for states and private hospitals in the open market will be used to vaccinate those above the age of 18 years.
• Priority: The Centre said that the second dose of all existing priority groups, “wherever it has become due, would be given priority, for which a specific and focused strategy would be communicated to all stakeholders”.
• Pricing: The Centre has only said that private vaccination providers shall transparently declare self-set vaccination prices.
• States have not been given the liberty to negotiate prices.
• Free vaccination would be available at all vaccination centres that receive doses from the Government of India — with those doses, healthcare workers, frontline workers, and those above 45 will be vaccinated.
• Since no doses will be made available to the private sector, private hospitals will have their own rates.
• Plan vaccination sessions: The states will know in advance that for the next 15 days, they will receive a specific number of doses.
• Imported vaccines: The Centre will allow the imported, fully ready-to-use vaccines to be entirely utilised in the other-than-Government of India channel.
• A foreign pharma giant will be free to directly sell the entire stock in the open market at a competitive price.

 

Criteria for number of doses

• The Centre will allocate its 50 per cent share to states based on 
  • the extent of infection (active cases) and 
  • performance (speed of administration). 
• Now, low wastage will be incentivised.

 

Central government’s view:

• Incentivising companies: The government pointed out that both manufacturers have taken financial risk in developing and manufacturing the vaccines. 
• No effect on beneficiary: The difference in prices will not have any impact on the ultimate beneficiary - the eligible person getting the vaccine - since all state governments have declared their decision to administer vaccine to their residents free of cost. 

 

Concerns:

• Commercial interests: The new policy is concomitantly deregulating the vaccine market, which currently has just two suppliers, in a situation of extreme shortage. 
  • There is little clarity on the mechanism that manufacturers will employ to decide among states that place orders. 
  • And in the absence of a formula or guidelines there will be no social basis for allotting vaccines to states.
  • Private companies would prioritise selling at Rs 600 per dose and not Rs 400 per dose. 
  • No other country is doing open market sale as yet, because all these vaccines are still under restricted or emergency use permissions and have not yet been fully licensed in their countries of origin.
• Shortage of vaccines: Given the country’s current production capacity and the delay in bringing in foreign vaccines, supply will almost certainly fall short of demand.
• Less equitable: It makes supplies less reliable and vaccination more expensive and less equitable across geographies and sends the marginalised to the back of the queue. 
  • It delays vaccinating the vulnerable, by halving their allocation.
• Less manufacturers: Covaxin is not more widely licensed, given that much of the core work in developing the vaccine was done at the ICMR-NIV in Pune.
• The high price States will pay: Richer states, which have the ability to procure large amounts, and states with large networks of private hospitals, are expected to receive a higher proportion of doses from the open market.
  • The Centre has fixed both quantity and price. It is clearly not a liberalised policy.
  • There is no clarity on what happens if the private sector cannot absorb the 25%? The private sector allocation actually privileges large urban areas, where it is more present.
  • Thus, instead of the full production at zero cost, the States now get one quarter of the production at twice or more the price paid by the Centre. 
• Long negotiations/ global tenders: States are trying to secure other supplies, e.g., via global tenders that many are now floating. 
  • Efforts in the direction of procurement of other vaccines from other countries is essentially a responsibility of the Central Government”. 
• Response to door-to-door vaccination: Yes, it is impracticable. But, the spirit is to make vaccination easier to access, e.g. through pop-up centres in communities, maintaining the necessary protocols.
• Cooperative federalism: There is not enough residual trust between the Centre and States for such equitable distribution.

 

Way forward:

• Comforting states and vaccine makers: The new vaccine policy increases the vaccine maker’s revenue, with a weighted price of ₹477 per dose for Covaxin and ₹302 per dose for Covishield, based on prices to be paid by States and private firms. 
• Special interest-free 50-year loans: States could bear the extra cost directly without this new policy. 
• It could even be financed by special interest-free 50-year loans to States, as promised last year for infrastructure, by the Finance Minister.