Lack of transparency in pricing is bad for India’s COVID-19 vaccine drive and economy

Reuters

On April 19, the Government of India announced several changes in its vaccination policy. From May 1, everyone 18 years or above can get vaccinated. States and private hospitals can procure vaccines directly from manufacturers at pre-declared prices. Vaccines, which are approved by the Indian regulatory agencies, can even be imported by states and private players, thereby potentially improving India’s vaccine supply.

The call to provide vaccination to the people of working age group had come from several quarters, including the opposition parties. The logic was that we had to protect our most economically productive group from severe reactions to the virus, otherwise the impact on livelihoods, families and the nation’s economy would be catastrophic. All of this came at a time when India was at the cusp of a vaccine shortage. There was a mismatch between demand and internal production, due to various reasons, and it was resulting in disruptions in vaccine supply across the country.

Free Rein

Till date, the entire procurement for India was done by the Centre and the doses were distributed to the states. Now, 50 percent of the vaccine doses will mandatorily go the Centre and the rest will be divided up between states and private healthcare providers. The manufacturers were given the freedom to raise the prices for sales to state government and private hospitals, but they were supposed to give the vaccine to the Centre at the same price that they were previously charging (Rs. 150/$2.06 per dose).

The Serum Institute of India (SII) came out later with their pricing policy for Covishield, which is the Indian manufactured version of the Astra Zeneca vaccine — Rs 400 ($5.30) per dose for state governments and Rs 600 ($7.95) per dose for private hospitals. A few days later, Bharat Biotech which manufactures Covaxin stated that they will be charging Rs 600 ($7.95) from states and Rs 1,200 ($15.90) from private hospitals. With this move, the onus of vaccine procurement and distribution has been placed on the states, which effectively has very little expertise in the vaccine space.

States At A Disadvantage

Be it the Universal Immunization Programme or Polio, it was the central government that led negotiation and procurement efforts. The states were only tasked with maintenance of cold chain and ensuring adequate uptake among the target population. The current move places the states at a tremendous disadvantage when negotiating with the vaccine manufacturers.

Besides, there is an inherent issue of justice associated with the same vaccine being supplied at two different costs to two public procurement agencies, which has the same set of beneficiaries. The price fixed for the states by the SII is the highest it has asked from any public procurement agency in the world!

At the same time, High Income Countries such as the United States or members of the European Union have managed to negotiate better terms than Low/Middle Income Countries, and they have raced ahead in their vaccination coverage. It is shocking to observe that the price sought from states in India is more than twice the amount paid by the European Commission for the same vaccine!

 Transparency In Vaccine Pricing

Adar Poonawalla, the Chief Executive of the SII, had previously told a news channel that his company was making minimal profits even by selling Covishield at Rs 150 per dose. This makes us wonder why a free rein was given to these manufacturers to fix prices for state governments. Besides, the high prices fixed by the vaccine manufacturers sets a bad precedent for transparency in pharmaceutical pricing during a critical public health situation.

Significant public investment has gone into the Research and Development (R&D) processes of these two vaccines. A paper (in a pre-print server) by researchers from Oxford, Cambridge, Imperial College and a few other reputed institutions argues that 97 percent of the research which went into the AstraZeneca (Covishield vaccine has been subsidised through public funding. Such details regarding Covaxin is not available, but it is assumed that a lot of public resources were used in the R&D process through support from Indian Council of Medical Research (ICMR).

If such public money has been used in the development of these vaccines, there should be enough transparency in the pricing of these vaccines too. The public should be aware of the cost of production of each vaccine; and there should be public (in this case, government) control over the pricing and production. Besides, AstraZeneca had originally promised that it would not take any profits from manufacture of the COVID-19 vaccine till the ‘pandemic is over’. Whether that policy would apply to its licensee manufacturer is a question that needs to be answered.

Costly Vaccine Bad For Economy

Given the precarious fiscal situation of the state governments, many of them may not be able to absorb the costs of vaccine procurement and will be forced to pass it on to the people in some form. Given the disruptions in the Indian economy after the onset of the pandemic, an average person working in an informal sector would find it difficult to vaccinate their families.

With the average daily wage of a male in a rural area being ~Rs 324, the cost of getting two doses of Covaxin for a family of four from a state government supply would be as high as 15 days’ wages! This reduces financial access to vaccination and can be a reason for poor vaccination coverage in specific population sub-groups. This decision is very difficult to digest when we understand that subsidising the vaccine for our entire population would have costed only between $6 billion to $8 billion.

If this pandemic-induced disruption continues for one more year, the cost to the Indian economy will be much higher than the figure cited above. Besides, the loss of government revenue in the form of reduction in tax collection will also be significantly high. Even though there are supply constraints for the vaccine, a good vaccination initiative can boost investor confidence in the economy and also the morale of the working population.

Therefore, it is logical that the central government spends enough money to control and run the vaccination programme for COVID-19, which seems to be the only fool-proof solution to keep the disease at bay. Though private players are important partners in this fight, they cannot be allowed to dictate terms or use this difficult situation for profiteering.

When everyone is doing their bit to get the country out of this mess, it is only reasonable to assume that the vaccine manufacturers will take a more proactive position and ensure transparency in the entire process.