Centre defends Covid-19 vaccine pricing strategy in RTI

The Narendra Modi government has justified the Covid-19 vaccine pricing strategy adopted for states and private hospitals with an RTI saying that it was done by the companies factoring in "scaling up and expanding" production capacity, cost for innovation and expensive manufacturing process.

In its response to the RTI filed by transparency activist Vivek Pandey, the Ministry of Health and Family Welfare also expressed hope that the prices are "automatically expected to come down" once the availability of vaccines increases.

The Ministry’s assertion in the RTI response issued on Sunday comes amid the Opposition questioning the Centre for not procuring vaccines for states and making them buy vaccines directly from the manufacturers for inoculating people between 18 and 44 years.

Serum Institute of India, which manufactures Covishield, is selling it at Rs 300 for states and Rs 600 for private hospitals, while Bharat Biotech sells its Covaxin for Rs 400 and Rs 1,200 respectively after the Centre put in place the Liberalised Pricing and Accelerated National Covid-19 Vaccination Strategy. At the same time, the Centre is buying both the vaccines at Rs 150.

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The RTI said the present cost of vaccines for the Centre has been "agreed by the manufacturers for the initial quantity of doses before the implementation of" the liberalised policy, which was unveiled in late April to allow states and the private sector to buy directly from the manufacturers.

"The price for subsequent procurement will be re-negotiated with the manufacturers. However, the aim of liberalised pricing is to incentivise the manufacturer to augment vaccine production capacity and attract new manufacturers with an aim to increase availability of vaccines," it said.

Under the Liberalised Pricing Strategy, it said, the manufacturers were requested to make an advance declaration of the vaccine price for supply that would be available to states and private hospitals. Both SII and Bharat Biotech had made the announcements.

The pricing "factors in the investment for scaling up and expanding production capacity, cost for innovation and expensive manufacturing process. As the availability of vaccines increases, the prices are automatically expected to come down".

In an affidavit submitted in the Supreme Court on May 9, the Centre has said that "differential pricing is based on the concept of creating an incentivised demand for the private vaccine manufacturers in order to instil a competitive market resulting in higher production of vaccines and market driven affordable prices for the same".

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It said this also attracts offshore vaccine manufacturers to enter the country and result in increased availability of vaccines, the affidavit added.

Further defending the liberalised scheme, the Centre said it places large purchase orders for vaccines by nature of its large vaccination programme compared to the states and private hospitals and "therefore, this reality has some reflection in the prices negotiated".

The Supreme had earlier noted that compelling the states to negotiate with manufacturers on the ground of promoting competition and making it attractive for new vaccine manufacturers will result in a "serious detriment" to those in the age group of 18-44 years, including the underprivileged.

It had suggested that the "rational" method would be that the Centre procure all the vaccines and negotiate the price with manufacturers.

However, the apex court said it was not passing a "conclusive determination" on the constitutionality of the policy but emphasised that the manner in which the current policy has been framed would prima facie result in a detriment to the right to public health which is an integral element of Article 21 of the Constitution.