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India’s new vaccine strategy may backfire economically
Read more on - Polity | Economy | Schemes | S&T | Environment
- The story: After a tightly centralised vaccination drive that has delivered the required two shots to less than 2% of the population, the union government of India opened up its inoculation strategy in the middle of a raging pandemic. The goal is to flatten the curve through decentralised participation of all states. But will this sudden change work?
- The constraint: After the current spike will have peaked (no one knows when), people will still need to be inoculated at a rapid pace to flatten the curve and avert a third buildup. Perhaps that's when the problems in charging Rs 600 or Rs 1,200 for a life-saving vaccine will manifest. Let us not forget that a majority of Indian families earn less than Rs.10000 per month.
- Panic move: Expanding the campaign to all adults below 45 from May 2021 is a late but good move. India’s daily infection rate of almost 3,50,000 is the worst any country has experienced. Even then, shifting a big part of the financial burden to 28 state governments and letting private hospitals buy shots at Rs 600 to Rs 1,200 apiece — and sell them to patients at even higher prices — are both wrong.
- In a nation of inequalities and bursting with 7.5 crore newly impoverished after 2020's coronavirus lockdown, putting a price on any part of limited vaccine supplies could lead to unjust, lopsided distribution.
- Free, universal access, with New Delhi negotiating prices with at least four or five suppliers globally, could prepare India better for a third Covid-19 resurgence.
- Until herd immunity is achieved (and that's a long time away), private hospitals must continue acting as agents of the state, and impose only a limited markup on the stock they’re given free from the national pool.
- The Atmanirbharta mistake: It was a mistake to restrict the drive to just two Made-in-India vaccines: Covishield, the AstraZeneca Plc shot manufactured by the Pune-based Serum Institute of India Ltd., and Covaxin, an indigenously developed shot produced by the Hyderabad-based Bharat Biotech International Ltd.
- India managed to negotiate a competitive price of Rs 150 per shot, and then set out to distribute them free of charge — first to healthcare and other frontline workers and then to those older than 60.
- Only in April, the age restriction was lowered to 45. Covishield has accounted for roughly 90% of the 141 million (14.1 crore) doses administered so far. Nowhere near enough for a population of almost 1.4 billion. (140 crore)The second wave has exposed the problems with the approach. A severe oxygen shortage is causing the healthcare system to collapse, forcing authorities to change tack: State governments and private hospitals can directly order up to 50% of Serum and Bharat’s supplies to inoculate the younger population, while New Delhi will buy the other half to complete free vaccination of those above 45.
- Serum quickly announced a price of Rs 400 for states, and Rs 600 for private hospitals. Bharat’s rates are Rs 600 and Rs 1,200, respectively. This led to an outrage and charges of profiteering.
- Maharashtra case: The state most severely affected by the second wave, Maharashtra, might join a growing number that have announced free vaccination for all adults. Suppose that all states — even the most resource-strapped ones — somehow find the money. Even then the supply of vaccines is constrained. For a given 1 million doses, who will decide the allocation among states, and between those governments and a private hospital? When the antiviral remdesivir is selling on the black market at a 300% premium, risk of profiteering is very real.
- What is the right price: The only correct consumer price of vaccines is zero. After 2020's national lockdown, the urban poor are once again facing the brunt of lost livelihoods from localised curfews and all-pervasive fear. The world’s biggest democracy can’t shut anyone out of the market for vaccines. So the strange situation may arise where government hospitals have run out of stock and private hospitals have stocks but no takers.
- Over time: Slowly, the supply crunch will ease. Russia’s Sputnik V, initially imported and then made locally, should be available by the end of May. Other homemade options might take longer. Hyderabad-based Biological E Ltd., which is conducting clinical trials in India for an antigen developed by Texas Children’s Hospital Center for Vaccine Development, has won US funding to ramp up production capacity to 1 billion doses in India by the end of 2021. States can also import shots in use globally at prices preset by their manufacturers. But given the worldwide supply constraints, it’s safe to assume that Serum’s hold isn’t going to reduce meaningfully soon. Introducing the logic of free markets into a situation that’s anything but makes no sense.
- Union must lead: All arguments aside, it is clear that the Indian government, with its Rs 35,000 crore vaccination budget, should be inoculating everyone. Free of charge. Then, while states don’t have any bargaining power against vaccine producers, New Delhi has plenty of carrots and sticks at its disposal. Bharat Biotech’s product has resulted from publicly funded research; it was authorised for emergency use even without Phase 3 clinical trial data. The government is giving both Serum and Bharat financial assistance to ramp up production. Serum has also been subjected to export restrictions to help tide over a domestic shortage. Had the Modi administration put in large, confirmed orders with Serum — as well as with Pfizer Inc., Moderna Inc., and later, Johnson & Johnson — it could have held the blended price close to the originally negotiated Rs 150 apiece. Or at least closer than it would be now.
- Summary: Trying to save money on vaccine subsidy that will cost less than 0.4% of gross domestic product could lead to output (and tax losses) many times higher. Daily fatalities are nearing 3,000 and even that’s a gross underestimate! If India cannot inoculate more than 100 crore very rapidly, it risks paying a huge price economically. And this is why vaccines must be free for all, immediately.
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