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COVID-19: As vaccine shortage bites, Centre unlikely to take over procurement completely

With their procurement tenders getting tepid response from global pharma majors, more states now want the Centre to once again take over as the sole procurer of vaccines. The Centre is unlikely to do so even as a supply-side shortage is expected, at least for the next three months

May 25, 2021 / 05:52 PM IST
Image: AP

Image: AP

A shortfall of vaccines, states receiving lukewarm response from global pharma companies to their procurement tenders, and a central government reluctant to re-centralise distribution are what is plaguing India’s COVID vaccination front now.

Even as a devastating second wave of COVID-19 recedes (with fears of a third one), the issue of procurement and distribution of vaccines is set to continue for the time being.

Moneycontrol learns that the Centre is highly unlikely to once again take over as the sole procurer of vaccines, even as a supply-side shortage is expected to be something the Centre and states have to live with at least for the next three months.

Sources say that the vaccination procurement programme was decentralised, based on inputs from states, something the Centre has also submitted in an affidavit to the Supreme Court (SC).

Reversing that decision will not eliminate the issue of shortfall, which is expected to last a few months, a top official said.

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COVID-19 Vaccine

Frequently Asked Questions

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How does a vaccine work?

A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.

How many types of vaccines are there?

There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.

What does it take to develop a vaccine of this kind?

Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.

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“If the Centre once again takes over as the sole procurer of vaccines from manufacturers, the states and the private sector will have to adhere to the rationing set by the Centre. This is not an ideal situation and this was the reason it was decentralised in the first place,” said the official.

“The states had requested that they be allowed to use their own resources and vaccinate the 18-44 age group. So they were given the option of procurement,” the official said.

In the 45-plus age group, there are some 20 million doses left to be given, including second doses, after which the Centre would start its own programme for the 18-44 age group, he said. This means that the Rs 35,000 crore vaccination budget for the year is set to be used up by the Centre.

Another official also said that the Centre’s logic in allowing the private sector, leaving aside the states, to procure directly is because it will give basic economic incentives to manufacturers.

The problem before the states

States continue asking the Centre that it should once again take over vaccination procurement, the latest being Delhi Chief Minister Arvind Kejriwal on May 24.

“This whole thing of municipal corporations doing it and states doing it is ridiculous. I am not surprised at these kinds of (lukewarm) responses to state tenders. The Centre shouldn't have abdicated its role as the main procurer,” said Dr KV Balasubramaniam, a vaccine industry veteran and life science industry consultant.

The latest state whose vaccine tender received tepid response was Maharashtra, a relatively rich state. As per some reports, the Brihanmumbai Municipal Corporation (BMC) received three bids for the Russian Sputnik vaccine.

Dr Amir Ullah Khan, research director at the Centre for Development Policy and Practice (CDPP), said that in times of stress to the balance sheets of the state governments due to COVID-19, there are reputational issues as vaccine makers fear delays in payments. “Vaccine manufacturers are demanding cash and carry for supplying COVID-19 vaccines," Khan said.

“If you look at our own manufacturers, Bharat Biotech and Serum Institute of India (SII), they are struggling to expand capacities. Both companies have committed much of their capacities to supply to the central government in the near term. Other vaccine makers like Moderna, Pfizer and Sputnik V would need a cold chain of -18 to -70 degrees Centigrade. That's also a challenge beyond big cities,” Khan said.

Kejriwal has said that American pharmaceutical giants Pfizer and Moderna have refused to sell shots to the Delhi government and contended that they would rather supply to the Centre.

"We've spoken to Pfizer and Moderna for vaccines, but both manufacturers have refused to sell vaccines directly to us. They have said they will deal with the central government. We appeal to the Centre to import vaccines and distribute to the states," he said on May 24. This comes after Punjab also said that Moderna declined to sell vaccines.

Reacting to these statements at a press conference, Union Health Ministry Joint Secretary Luv Agarwal confirmed that procurement from these two companies was being coordinated by the Centre.

Price a sticky issue?

However, Moneycontrol understands that at current price points, even the Centre may be unable to place orders ‘at scale’ or in bulk.

The pandemic has stretched the finances of the Centre as well and it would be extremely reluctant to pay public money to buy vaccines at $35 a shot, unless the manufacturers reduce prices is the sense that Moneycontrol got from a top official.

It is learnt from industry sources that Pfizer’s vaccine could be priced at about Rs 700 per dose, the same as that of Johnson & Johnson. However, the Moderna vaccine could cost as much as Rs 2,755 per dose.

By comparison, SII has set Covishield price at Rs 300 per dose to states and Rs 600 per dose to private hospitals. The company is supplying to the Centre at Rs 150 per dose. Bharat Biotech set Rs 400 per dose to states, and Rs 1,200 per dose to private hospitals. Covaxin’s price to the Centre is the same as that of Covishield.

Dr Reddy's had announced that the imported doses of Russia's Sputnik V COVID-19 vaccine have been priced at Rs 948 plus 5 percent GST or Rs 995.40 per dose. It said the price of the imported Sputnik V vaccine would remain the same for the government and private channels.

Emails sent to Moderna and Pfizer remained unanswered. Pfizer has categorically said that its priority would be to exclusively support governments by supplying its vaccine only to governments for their immunisation programmes. This means that selling to the private sector has been ruled out for now.

Dr Reddy’s last week said that 8-9 states have approached them for the procurement of teh Sputnik V vaccine. It has a supply commitment of 36 million doses from Russian sovereign fund RDIF in the next two months. After that, Dr Reddy’s is expecting local production to kick in by July.

An executive of another company that signed an agreement to produce Sputnik V vaccine said states are approaching them and there is a lot of demand, but it would take at least three months to fulfil those supply commitments.

What next?

Dr Khan of CDPP suggests that states could consider a model on the lines of the African Vaccine Acquisition Trust, where sovereign countries came together to initiate price negotiations for the bulk purchase of COVID-19 vaccines.

Officials from the Centre, states as well as the private sector agree that the supply-side issues will take some time to ease, and some of the foreign vaccine makers could start supply only in the second half of the financial year.

"We have nine crore people in the 18-44 age bracket. For these people, we have to get vaccines," said Navneet Sehgal, Additional Chief Secretary, Information, Uttar Pradesh. UP was the first state to float a global tender for vaccines.

“Domestic manufacturers won't be able to (supply) that much, so we decided to explore the possibility of buying it from outside as the central government allowed us that freedom," Sehgal said.

Sehgal added that they have to complete the tender process within 21 days, but added that it will be extended by another 15 days. While budget for the procurement does not seem to be a concern for UP, even the Centre will be closely watching the response that the country’s most populous state receives for its tender, especially given that the same party is in power in the Centre and in Lucknow.

This could certainly decide the next steps that the central government takes.
Arup Roychoudhury
Viswanath Pilla is a business journalist with 14 years of reporting experience. Based in Mumbai, Pilla covers pharma, healthcare and infrastructure sectors for Moneycontrol.
first published: May 25, 2021 05:52 pm

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