India promotes vaccine inequity in the midst of the pandemic

Whatever policy each State government formulates to identify those eligible for free vaccines, it would need to allocate huge resources to buy vaccines. A significant number of people are likely to fall through the cracks and not be protected.

With a stroke of a pen, the Central government on April 19 abdicated responsibility to ensure equity in vaccine availability by clearly stating that free vaccination would be limited to healthcare and frontline workers and people above 45 years of age. Worse, the government has set the stage for State governments, private hospitals and private market vying with one another to have access to vaccines from the Serum Institute of India (SII) and Bharat Biotech.

The April 19 announcement of the roll-out of vaccines in the third phase, wherein anyone above 18 years is eligible for vaccination, comes at a time when many States have already been reporting shortages in supply, which is reflected in the dropping number of doses administered daily, the four-day Tika Utsav (vaccination festival) notwithstanding.

While allowing all adults above 18 years is indeed a welcome move, the announcement comes with several caveats. First, the two vaccine manufacturers will supply 50% of their vaccines to the Union government, while the remaining doses will be made available to States governments and private hospitals. A press release from the Serum Institute of India says Covishield will be available in retail and free trade after four-five months.

Unlike the rest of the world, the Indian government took the first step of charging for vaccines by fixing the cost of jabs at private hospitals at up to Rs.250 per dose. But with the April 19 announcement, the government has gone the whole hog by allowing the two companies to decide the price of vaccines.

A dangerous gamble 

Many developed countries have sealed vaccine supplies many times their total population; even the U.S., where healthcare is highly privatised, is vaccinating all adults for free. Against this, India has taken a dangerous gamble in allowing companies to sell vaccines at huge profits in the midst of a pandemic, and particularly so when the second wave is ravaging the country and daily deaths are spiraling.

The government’s projected population for the year 2021 for the 18-44 years age group is 595 million. With two doses per person, this translates to 1,190 million doses. This huge population has not been included in priority groups to have access to vaccines; it would be covered solely by State governments and the private market. While the private sector may be able to cater to a small percentage of the population that can afford to pay a higher price per dose, the States must buy vaccines and administer them for free for a huge number of people, lest the poor are left out. Whatever policy each State government formulates to identify those eligible for free vaccines, it would need to allocate huge resources to buy vaccines. A significant number of people are likely to fall through the cracks and not be protected.

As per the Centre’s demand, on April 21, Serum announced the price at which vaccines will be sold to States and private hospitals. Adar Poonawalla, CEO of Serum Institute told CNBSCTV18 that Covishield will cost Rs.400 for both Central and State governments and Rs.600 for private hospitals.

On April 6, Mr. Poonawalla, went on record saying that even at the subsidised price of Rs.150–160 per dose, the company was not selling at the cost price but was making a profit. “I would not say we are not making any profits, but we have sacrificed what we call ‘super profits’,” he told NDTV. “Super profits are needed to further build capacity, innovate and compete with the western companies. But we don’t care for these at the moment as we want to address the needs of the nation first … and we can make profits after a few mont

However, since the Centre has already agreed to advance Rs.3,000 crore to the Serum Institute and Rs.1,500 crore to Bharat Biotech to ramp up manufacturing facilities, would the two vaccine manufacturers still feel the need to make a killing?

Profiteering during the pandemic

On several occasions, the latest being December 30 last year, both Oxford University and AstraZeneca have promised to manufacture and distribute the vaccine “on a not-for-profit basis for the duration of the coronavirus pandemic”. When AstraZeneca walked back on its word with Brazil, the company said it had the right under the contract “to declare the pandemic over by July 2021” and that it could extend the agreement beyond July 2021 but only in “good faith” and if it considers that the COVID-19 pandemic is not over.

In India, the Serum Institute, in spite of not selling the vaccine at the cost price, is making a small profit while supplying it at Rs.150 per dose. With the price tags of Rs.400 and Rs.600 per dose, the company will be earning more than 2.5-3 times the profit as early as May 1, when the pandemic is nowhere close to ending and the second wave is raging in India. 

How much vaccine inequity will be seen in each State will depend on the policies that governments design to identify beneficiaries. Since no one is safe till at least a vast majority is protected to achieve herd immunity against COVID-19, it is imperative that the Indian government ensure that companies don’t become greedy while selling to State governments. Any “super profit” that a company plans to make can come from retail and free trade about four to five months later.

Further, India may soon have three more vaccines, in addition to the three already approved for restricted use. The rich can then shop for the best vaccines in the open market, in line with the government’s announcement that all imported vaccines will be available only in the private market.

The second wave has amply demonstrated that unlike last year, more people in the age group of 18-40 years have been symptomatically infected, with many requiring hospitalisation. Hence, a policy that promotes vaccine inequity based on age bands is a dangerous proposition.

States to compete with each other

A bigger issue is that with States required to procure 50% of vaccines directly from the manufacturers, the governments will end up competing with each other and with private players. A similar situation was seen in the United States last year, when former President Donald Trump made individual States procure ventilators and masks on their own, leading to a muddle where States outbid each other and diversion of supplies from one State to another became rampant.

With around 2.4 million doses being produced a day, the Serum Institute is currently manufacturing 60-65 million doses a month. According to Mr. Poonawalla, the company will be able to ramp up production only after June; capacity addition at Bharat Biotech, too, will take a few months. Hence, the current vaccine shortage is likely to continue for a few more months. Amid the strident criticism for the shortages, the Centre, by allowing States to procure vaccines directly from manufacturers, has deftly shifted any future blame to State governments.

Published in The Hindu on April 22, 2021