Though the Union government has allowed the extension of the COVID-19 vaccination coverage to the 18-44 age group from May 1, many states have announced that they are not in a position to do so anytime soon.
States have earlier assured people that they would provide the jabs free of cost for the 18-44 age group, after the Centre said it would reserve its quota exclusively for people 45 years and above, healthcare and frontline workers.
A few states like Maharashtra and Gujarat started inoculating lower age groups on May 1, but in very limited numbers. They did this by diverting some stocks, from the Centre, meant for those aged 45 years and above.
Large private hospital chains have announced rolling out COVID-19 vaccination, but it will come at a price.
CoWin rush
Crores of Indians have frantically tried to book a slot on the CoWin app to get their jab, but only a tiny fraction have been lucky. Only 86,023 people from the 18-44 age group have got the vaccine on May 1, the first day of the Phase-3 rollout.
This age group consists of approximately 59 crore people, which would require 1.22 billion (122 crore) vaccine doses.
Not enough supplies
Adar Poonawalla, CEO of Serum Institute of India (SII), told Financial Times that the vaccine maker’s current production capacity is 60-70 million doses. Poonawalla has indicated the company may not hit the 100-million-dose capacity until July.
Bharat Biotech is producing about 10 million doses. Only 1,50,000 doses of Sputnik V have arrived from Russia, but these would take a few weeks for the roll-out.
Half of the doses produced will have to be reserved for the Central government. The states, private hospitals and corporates will have to compete with each other for the rest.
Daily vaccination
The daily vaccination rate, which is expected to gather momentum in the backdrop of the second COVID-19 wave, has come down. It was hovering well above the 3-million-per-day-mark, but has dropped to about 2 million-per-day now.
India has so far given 157 million or (15.7 crore) COVID-19 vaccine doses.
Supreme Court steps in
The supply crunch situation and vaccine prices have come under the Supreme Court (SC) scanner.
An SC bench, comprising Justices DY Chandrachud, L Nageswara Rao and S Ravindra Bhat, responding to a suo motu case, raised several questions on the Centre's vaccine policy. They sought details from the Centre on the supply-demand situation, and proposed steps to boost supply and distribution.
Most importantly, the apex bench questioned the basis and rationale adopted by the Union government on pricing.
"The government shall explain the rationale for differential pricing in regard to vaccines sourced by the Union government, on the one hand, and the states, on the other, when both sources lead to the distribution of vaccines to citizens,” the court said in its order. Moneycontrol saw a copy of the order.
Meanwhile, 13 opposition parties have written to the central government, urging it to provide free vaccination to every citizen, and utilise the budgeted Rs 35,000 crore for this purpose.
Government justification
The Centre justified its policy to decentralise vaccine procurement, citing “co-operative federalism”.
“During the ongoing consultation with the states, demands/concerns were raised by states to expand the scope of the vaccination drive to include the beneficiaries beyond the priority groups identified by NEGVAC (National Expert Group on Vaccine Administration for COVID-19) as approved by the central government,” the government told the SC.
“As a matter of cooperative federalism, it was felt necessary to decentralise vaccine procurement and to enable states to expand the vaccination drive to other groups between the age of 18-44 years. However, since the priority group as identified by the Union of India (which had more vulnerability) was not fully vaccinated, it was considered imperative to carry out two drives separately. Thus the states were given a participatory role in the procurement of vaccine for the 18-44 age group,” the Centre said.
Experts on public health policy, manufacturing and NGOs focussed on health, whom Moneycontrol spoke to, fear the Centre's “liberalised” vaccine policy may lead to inequities in the distribution of the vaccine.
Centre's vaccine policy in tatters
Typically, vaccine prices decline with time and a centralised procurement will lead to economies of scale and higher bargaining power.
This is what is happening even for COVID-19 vaccines in India. The two vaccines -- Serum Institute of India's (SII) Covishield and Bharat Biotech's Covaxin -- were quoting Rs 200 per dose and Rs 295 per dose, respectively. The initial procurement by the Central government saw prices dipping to Rs 150 per dose, excluding taxes.
On April 21, the government announced a policy shift.
It said manufacturers should supply 50 percent of their monthly doses to the central government and are free to supply the remaining 50 percent to states, private hospitals and industrial establishments.
The Centre gave manufacturers the freedom to set the prices, with the condition that they have to make an advance declaration.
The Centre also put the onus on the states and UTs to inoculate the 18-44 age groups. A back-of-the-envelope calculation puts the burden on states anywhere between Rs 40,000 crore-Rs 50,000 crore.
The central government clarified that it will be buying both the COVID-19 vaccines at Rs 150 per dose for the current orders.
Most states said they will not be able to kick-start the vaccination for the 18-44 age group as they are yet to call tenders for supplies, and some haven't even started the process.
‘Can a Jharkhand negotiate with a Pfizer?’
Sujatha Rao, former Union Health Secretary, told Moneycontrol that the Centre's policy will lead to inequality in distribution as larger, richer states are likely to corner supplies. The states will have to float global tenders to procure vaccines.
"Can a Jharkhand negotiate with a Pfizer? Why is the government fragmenting and deviating from a well-established centralised vaccine procurement policy that functioned effectively to procure vaccines," Rao asked.
She also wondered if there was any quality assurance system in place for states.
A top executive of a vaccine company, who didn't want to be named, told Moneycontrol that it is quite possible that the government may be compensating manufacturers for the loss of their lucrative export orders, as they are now compelled to supply for the domestic market.
For instance, Bharat Biotech has kept its export price at $15- $20 per dose.
What is the exact price of the vaccine?
SII set Covishield price at Rs 300 per dose to states, double than the Centre’s price of Rs 150 and Rs 600 per dose to private hospitals. Bharat Biotech set Rs 400 per dose to states, more than double at what the Centre is procuring, and Rs 1,200 per dose to private hospitals.
Private hospitals will charge extra for administering the vaccine and there will be supply-chain costs.
To be sure, the exact cost breakup of the two vaccines isn't disclosed by the government or manufacturers. Questions sent to SII and Bharat Biotech are yet to elicit response.
Vaccine prices highly inflated, says industry veteran
Dr KV Balasubramaniam, a vaccine industry veteran and life science industry consultant, who worked out the approximate cost of manufacturing the vaccine, says the prices quoted by the vaccine companies are far above what the actual prices should be.
These vaccines, he says, are based on well-established technology platforms and manufacturing processes.
He estimates that Covishield shouldn't take more than Rs 25-30 per dose to produce. Even if they charge a 100 percent markup, it should not be more than Rs 50-69 per dose.
“The technology (of Covishield) was virtually obtained for free, although they say they have to pay some royalty to AstraZeneca and commit supplies in return. There is no huge capital loading as they have repurposed their existing manufacturing units to produce the vaccine. They haven’t built a greenfield manufacturing plant, which would anyway take about two years to begin production,” he said.
“Also, they didn't do any R&D for developing Covishield and the clinical trials have been quick and not as expensive as in normal times. Just think about the volumes of vaccines they are going to produce. It is humongous -- at 1 -1.5 billion doses. The vials are also multi- dose 10 dose vials. There aren't also any marketing and distribution costs. All these factors should make the vaccines far cheaper," Balasubramaniam said.
In case of Covaxin, Balasubramaniam estimates the production cost should not be more than Rs 40 per dose.
"Covaxin might not get the same kind of volumes like Covishield, but the pricing doesn’t justify the cost. They too have got a lot of help from ICMR," Balasubramaniam says.
Balasubramaniam, who headed public sector company Indian Immunologicals Ltd (IIL) for a long period and was instrumental in its profitable growth, said that the Foot & Mouth Disease (FMD) vaccine made by IIL, which is an inactivated vaccine, and with three virus strains, not just one, is being presently sold to the government for around Rs 12 per dose in 50 dose packs.
"In a pandemic situation, you'll expect the central government to take command and ensure equitable pricing, supply and distribution, and not leave the state governments and the public to fend for themselves," Balasubramaniam said.
Balasubramaniam says if the government is serious about determining the right price, it is well within its rights to conduct a technical and cost audit to verify the claims of the companies on cost and volumes.
SII defends pricing
SII defended its pricing in a statement last week.
"The initial prices were kept very low, globally, as it was based on the advance funding given by those countries for at-risk vaccine manufacturing. The initial price of Covishield for all government immunisation programme, including in India, has been the lowest," SII said in a statement.
"The current situation is extremely dire; the virus is constantly mutating while the public remains at risk. Identifying the uncertainty, we have to ensure sustainability as we must be able to invest in scaling up and expanding our capacity to fight the pandemic and save lives," it added.
The All India Drugs Action network (AIDAN), a group of healthcare-focused NGOs, has expressed concern.
"The prices indicate that both companies are adamant on profiteering at a time when the whole country is in the throes of a massive crisis," said Malini Aisola, AIDAN Convenor.
"The policy is essentially also putting state governments against the private market and against each other. The shortages and price differential gives a strong incentive for manufacturers to sell and provide vaccines to the private sector at a high price," Aisola added.
