Why experts are not happy with India’s COVID-19 vaccine procurement, pricing policy

The Narendra Modi government’s recent strategy in respect of vaccination against COVID-19 has drawn flak from a section of public healthcare experts as well as economists.

The Union government recently announced two crucial steps: Vaccine makers can sell half their COVID-19-related stock to states and the private sector and vaccination would open up for the 18-45 age group May 1, 2021; but they won’t be sponsored by the Centre, like others have been until now.

Earlier, the central government had agreed to provide emergency use approval for vaccine candidates that have been okayed by the developed countries.

Soon after the Centre’s decision, Serum Institute of India Pvt Ltd priced its Covishield vaccine at Rs 600 a shot for private providers and Rs 400 for states, later scaled down to Rs 300. Bharat Biotech International Ltd has priced a single dose of its Covaxin at a flat Rs 600. Every recipient must take two doses of either vaccine.

Experts slammed the move by the Centre to allow COVID-19 vaccine makers to sell 50 per cent of their stock directly to states and the open market.

More than 20 states, including Kerala, Delhi, Maharashtra, Haryana, Odisha, Jharkhand and Karnataka, have announced free vaccination either for all or particular age groups.

State governments, which have no prior experience in procuring vaccines, will end up spending 27 per cent of their health budget on an average, Anjela Taneja, lead (inequality, health, and education) for charity network Oxfam, told Down To Earth. The figure is based on an estimation done by Oxfam for an upcoming report.

“At least 27 per cent of the state health budget 2021 will go into just getting the vaccination done. How will the procurement of medical oxygen, ventilators, hospitals and medicines happen?” she asked.

Calculations done by different experts suggest that vaccinating the entire population would cost the Union government somewhere between Rs 50,000-70,000 crore. The Union government had allocated Rs 35,000 crore for COVID-19 vaccination in the 2021-22 Budget.

Ratings agency India Ratings and Research Pvt Ltd’s (Ind-Ra) estimates show that vaccinating the entire population may cost Rs 67,190 crore, of which the Union government will incur Rs 20,870 crore and state governments together will incur Rs 46,320 crore. The total is only 0.36 per cent of the gross domestic product, a small amount, given the economic cost of the pandemic. The calculation was based on the assumption of Rs 400 per dose, with five per cent wastage.

Similarly, Indranil Mukhopadhyay, health economist at OP Jindal School of Public and Government Policy, said procuring vaccines for 1.3 billion Indians (Rs 500 per person) would have cost the government roughly Rs 56,000 crore.

“But if the central government is procuring at scale, the cost would be reduced. Then, a Rs 35,000 crore (budget) would also be good enough. If there is a shortfall, the PM CARES fund can be utilised,” he said – DTE