Covid-19 vaccine pricing: Modi has got it wrong

Under the ‘Liberalised Pricing and Accelerated National Covid-19 Vaccination Strategy’ (LPANCVS), which kicked off on May 1, the Centre has plans to vaccinate all adults aged 18 and above — about a billion people.

Given the mammoth task ahead, the vaccine pricing strategy has to be guided by two overarching considerations, namely (i) People should have absolutely no hesitation whatsoever in coming forward to get vaccinated, which, among other things, requires that this be done ‘free of charge’; and (ii) Manufacturers and suppliers should be willing to arrange for supplies of at least two billion doses within the shortest possible time frame, say, not extending beyond December 2021.

During the first phase of the inoculation drive launched on Jan. 16 (which covered healthcare and frontline workers and persons over 45 years of age), the Centre did it free for those who went to government vaccination centres (GVCs) even as it paid Rs 150 per dose to the manufacturers. However, those who went to private hospitals had to pay Rs 250 per dose to get vaccinated.

Involving private hospitals was a good move but charging for inoculation done there acted as a deterrent. No wonder, only 20 million people out of a total of 300 million got both the shots (even as other factors such as the initial vaccine hesitancy as also supply constraints were equally responsible).

Under LPANCVS, of its total supply, the vaccine manufacturers would give 50% to the Centre for Rs 150 per dose and make the remaining 50% available to state governments, private hospitals, industrial establishments at a price to be declared in advance.

The system of private hospitals inoculating those above 45 years for Rs 250 per dose ceased to exist as they no longer got any supplies from the GoI quota and have to procure directly from vaccine manufacturers at prices notified by the latter.

The manufacturers have since announced prices. The Serum Institute of India (SII), the maker of Covishield, charges Rs 300 per dose for supplies to state governments and Rs 600 per dose for private hospitals; Bharat Biotech, the maker of Covaxin, charges Rs 400 per dose for states and Rs 1,200 per dose on supplies to private hospitals. The Russian Sputnik V vaccine, licensed for manufacture to Dr Reddy’s Laboratories, has recently got approval and is available for close to Rs 1,000 per dose.

As for fresh supplies to the GoI for its 50% quota, even as the government continues to insist that the old price of Rs 150 per dose should continue, SII is insisting on Rs 300 per dose, the same as applicable on supplies to the states.

The dual pricing under the erstwhile regime was bad enough. The new system has brought in a multiplicity of prices— zero, Rs 300, Rs 400, Rs 600, Rs 1,000, Rs 1,200, depending on the vaccine type and who is buying it. More vaccines, like Nasal Covaxin (from Bharat Biotech), Pfizer-BioNTech vaccine, etc., are expected to get approval soon. Those are likely to be priced even higher. So the price points will increase further.

Out of nearly two billion doses needed to vaccinate one billion adults, one billion to be given from the states and private hospitals’ quota will have different price tags sufficient to destabilise the budget of even a middle-class family. For instance, a family of four taking Covaxin at a private hospital will have to shell out nearly Rs 10,000. So, a big chunk of these people will gravitate towards GVCs, where inoculation is done free. A break-down of the GVC network is almost inevitable.

The announcement by some states of making vaccination free for all won’t improve things. First, this will require them to give a subsidy on doses other than what they get from the GoI quota. Considering states’ precarious finances, it won’t be easy for them to fund it. Second, sans private hospitals (people won’t go there, thanks to the price barrier), states’ own healthcare centres can’t take the entire load.

As for manufacturers, given the uncertainties with regard to the ability of states to pay for their direct purchase (out of states’ 50% quota) and the Centre’s unwillingness to pay the higher price of Rs 300 per dose for Covishield— as sought by SII – for its own quota will come in the way of India securing timely supplies of the much-needed two billion doses.

The extant policy is neither conducive to users nor producers. Modi should effect course correction. The Centre should make vaccination ‘free for all’ and conduct centralised purchases from the manufacturers for all two billion doses at a good price. All stakeholders— GVCs, state health centres, private hospitals, industrial establishments, etc — should be involved in the vaccination drive. The budgetary allocation of Rs 35,000 crore for 2021-22 (with additional appropriation, if needed) should be used to meet the cost.

(The writer is a policy analyst)