An Analysis of the Covid-19 Vaccine Liberalisation Policy

As of the 19th of May, India has had 2.54 crore cases of Covid. More than 283 thousand people have died. Our healthcare infrastructure is scrambling to cope, to save those it can. However, it is visibly crumbling in the face of the constant inflow of patients. The country cannot simply shut down till the virus disappears and it cannot save all those infected. The only solution is large spread herd immunity – and this is solely possible through vaccination.

Vaccination drives so far

The first stage of India’s vaccination drive saw all healthcare and frontline workers receiving the dose. In the second stage, those above 60, and on April 1st those above 45 became eligible to be vaccinated. As of the 2nd of May, India has administered the vaccine to 15.4 crore people. 2.73 crore people have received both doses, which means only 2 per cent of the country’s population has been fully vaccinated.

The rapid increase in the number of cases and deaths pushed the government to take stronger measures to combat the virus. On the 20th of April, the government announced that from the third stage of the vaccination drive, – beginning from May 1st – everyone above the age of 18 would be eligible to receive the injection.

Currently, only two vaccines are being administered in India – Covishield and Covaxin.  Covishield was developed by AstraZeneca with Oxford University and has been manufactured by the Serum Institute of India (SII). Covaxin was manufactured by the local company Bharat Biotech. Through every stage of the drive, there has been a widespread, albeit justified fear of the vaccine supply running out. With the new policy and those able to be inoculated being increased dramatically, these worries have only grown. 

In an attempt to tackle these fears, the Centre announced that it was liberalising the procurement, pricing, and administration of vaccines. State governments and private hospitals now need to procure vaccines directly. 

Liberalisation and Increase in production of vaccines

Harsh Vardhan, India’s Union Health Minister, stated that the liberalisation would give impetus to existing producers to amp up their quantities, while also offering stimulus to new players entering the field. The higher price charged by private hospitals will be availed by those who can afford it, reducing the load on government funds and resources. It also allows the states to plan drives that are specifically tailored to their needs, which could help them reach out to more of their citizens. 

Industry officials have criticised this statement, believing that the supply will not be able to grow steadily or quickly enough to meet increased demand. Currently, SII manufactures 24 lakh doses and Bharat Biotech less than 6 lakh doses daily. The approximate combined daily supply is 30 lakh, far below the demand of 100 lakh. Adar Poonawalla, the Chief of SII, in a report, stated that the vaccine supply shortage will continue for months, with an increase in production only expected to take place post-July. Even post the increase – which is expected to be about 10 lakh vaccines daily – the supply will continue to fail to meet the soaring demand. Production capacities can be increased, however a major portion of the raw materials need to be imported and the process itself can take up to 6 months. While India can continue to explore foreign vaccines, liberalisation was largely expected to provide a boost to domestic production, which seems unlikely to happen.

The state has provided a grant of ₹4500 crores to the companies –  ₹3000 crores to Serum Institute and ₹1575 crores to Bharat Biotech –  to increase their manufacturing capacities. The funds for the grants come from the Indian taxpayer. As the primary provider of the fund, they should also be the primary benefactors. The vaccines produced should go to them, and not the open market.

Liberalisation and Prices of vaccines

As the main purchaser of crores of doses, the government had an advantage that allowed it to negotiate the prices of the vaccines. Liberalisation will take away this edge. Supply and demand problems with a large increase in demand and a disproportionately small increase in supply only have one outcome – a dramatic increase in the price. With states and private stakeholders competing for doses, the prices will be extremely susceptible to surges. SII and Bharat Biotech have already released new prices for the vaccines. These prices are at a significant markup. The increase in prices is by as much as 8 times the original in some cases, most at least double. Additionally, this is the price the companies will sell at, but stakeholders can add costs for administering the vaccine. This translates to even higher costs for  those who get the dose. Most recently, India has imported Sputnik V from Russia, however even this vaccine costs Rs. 995.

Original Price for Centre (Rs.)Price for States (Rs.)Price for Private Hospitals (Rs.)
Covaxin150600 1200 
Covishield150300 600 

Fig 2. Cost of Vaccines

The government has not provided a cap for the vaccine prices. Their statement stated, “private vaccination providers shall transparently declare their self-set vaccination price”. This leaves the companies at liberty to set and modify the prices. In an interview, Poonawalla has indicated that SII was recovering production costs and even making normal profits. This, coupled with the fact that government grants have gone into building additional capacities, allows the companies to make supernormal profits on the Covid Vaccines. Enabling the producers – in the middle of a pandemic and at the expense of thousands of lives –  to make crores in profit. 

The State’s health infrastructure has been crumbling. The health structures need to be strengthened and rebuilt. Oxygen, ventilators and medicines need to be procured to save those infected and fighting for their life. Their funds and resources need to be allocated to these purposes, not towards bidding for vaccines. The states that are harder hit need even more support, and they are the ones that will be at the worst disadvantage when it comes to bidding.

Liberalisation will only exacerbate the existing expansive inequity in healthcare. People are still reeling from the financial effects of the pandemic which brought with it pay cuts and job losses. The most economically vulnerable have been placed in a strained position. High vaccination prices will act as a barrier and marginalised communities will not be able to afford the vaccine. This strategy is dangerous for the country as a whole. The vaccine will not be efficient until large sections of the population receive it. If only the economically well off receive it, the virus will continue to mutate and strengthen – killing more and eventually rendering the vaccine redundant. 

Liberalisation and ownership of responsibility

The Centre has absolved itself of any commitment to the success of the vaccine drive. It is now the State’s responsibility to procure and administer vaccines. If anything goes wrong or is mishandled, the Centre can direct citizen’s ire to the State. The States have been set up to fail, stuck in an impossible situation, yet the citizens are being told to hold them responsible. 

We saw this strange, simultaneous claiming yet evading responsibility happen on April 29th, when CoWin first allowed those 18+ to book an appointment. The Centre highlighted that more than 1.32 Crore users registered on the portal, which handled more than 50 thousand API calls per second. However, no one below 45 was able to book an appointment. Slots for those in this age range hadn’t opened up because the States did not have the vaccine supply it required. The Centre was quick to take ownership of the success of the portal, while silently pushing the onus of the lack of actual appointments to the States. CEO of National Health Authority, RS Sharma, said “This phase onwards the Centre will not be responsible for non-booking of appointments at designated vaccination centres. For private vaccinations, that would be the responsibility of private hospitals. First-aid vaccination at centres would be the responsibility of the states.”

If citizens can sign up for the portal, but cannot book a slot or avail the vaccine, the registration is redundant. Marketing the success of the portal allows the Centre to use it as a smokescreen, shielding them from needing to take responsibility for the actual vaccine drives. If we are unable to hold the Centre accountable for these failures, we will not see them take the measures necessary to ensure the vaccine drive is successful. Instead, we will be forced to rely on States whose resources are already spread paper-thin. 

Alternatives open to the Centre

In light of the steadily growing death toll, Covid-19 vaccines and medicines must be considered public goods. The government could use compulsory licensing provisions under the Indian Patents Act 1970 for the two vaccines so that other pharmaceutical companies with capacity in the country could be involved in the production. There exist over 20 manufacturing facilities in India that can make vaccines and these should be utilised. The government could also expand vaccine manufacturing capacity in existing pharmaceutical public sector units. Considering that Covaxin was developed by the National Institute of Virology,  it could even grant free licences and technology transfer to manufacture the vaccine.

The drawbacks of the current liberalisation policy outweigh its benefits. It does not provide enough of an impetus to vaccine supplies and would result in a surge in the vaccine price. If there are options that exist where the production of the vaccine can be expanded dramatically and the price retained, those must be explored. There are multiple angles to this policy – including political. But right now, as our death toll rises, politics need to be set aside in the interest of our citizens. 

Conclusion

The economically vulnerable sections of our society have been bearing the brunt of the effects of the pandemic. They have lost jobs and sources of income. They have been stranded thousands of miles away from their homes with no way of getting back. They have been unable to social distance for lack of resources. And when infected, they have been unable to avail healthcare services. With the new policy, they will now struggle to receive the vaccines. They will be denied the ability to protect themselves from a deadly virus.

Prices will rise, sections of society will not be vaccinated and the Centre will shirk responsibility. Except it won’t end there. The virus will continue to infect and mutate. It will evolve to be immune to the vaccine and eventually it will make its way back to the vaccinated population and we will return to where we started.

The government needs to take responsibility. Not just for a registration portal, but for protecting its citizens. It needs to take the steps available to it to direct increased vaccine production. It needs to ensure that its citizens benefit from tax-payer grants that have gone into the expansion capacities. To tackle this pandemic, we need vaccines to reach everyone. The only way to make this possible is to make the dose free and easily available to everyone who needs to avail it. 

Wynnona Fernandes is a third year Political Science major at Ashoka University.

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