COVID-19 Second Wave

The fiasco that is India’s COVID-19 vaccine policy

Print edition : May 21, 2021

an Announcement outside a vaccination centre in Mumbai on April 30. Photo: PUNIT PARANJPE/AFP

A health worker writes the date and time on a Covaxin vial in Guwahati on April 22. Photo: Anupam Nath/AP

The Modi government’s decision to deregulate vaccine procurement and deliveries, just as the vaccine rollout runs into a supply constraint, threatens to leave millions of people uncovered. In the process, it compromises the nation’s defence against the virus.

INCREDIBLY, just when the country was about to be engulfed by the second wave of coronavirus infection, the Narendra Modi government made a major change in its vaccine policy. It chose to put a price on the vaccines. As a result, India stands alone in the comity of nations. Such a strategy is likely to compromise the government’s fight against the pandemic. The move is in keeping with its overall failure to be vigilant and not be swayed by ideological predilections, especially in pandering to business interests, and in resting on self-awarded laurels of having dealt with the COVID crisis successfully. As the Indian vaccination drive stalls, the Modi regime’s vaccine policy is clearly the weak link in the fight against the pandemic.

On April 19, the government announced its decision to deregulate the COVID vaccine procurement and delivery process, mainly from a duopoly of Indian producers. Further, it freed prices by setting them in a three-tier pricing regime offered to vaccine producers, and bizarrely, given the vaccine shortage, extended the coverage of the vaccine programme to those in the 18-44 age group in what would be phase 4 of the programme. Significantly, it decided to fragment the vaccination programme by stipulating that half of the sales would be through the Centre and the other half would be available to the States and private hospitals. How this quota would be managed in a quickly evident shortage was left to the imagination. Meanwhile, the new policy stipulated that the manufacturers could “self-set” prices for the free quota that was not the Centre’s share. It soon became evident that the new policy was a desperate attempt to shift the burden of vaccination to the States.

Serum Institute of India (SII) and Bharat Biotech International Ltd (BBIL), the two Indian vaccine producers that have been supplying Covishield and Covaxin respectively at Rs.150 per dose, quickly increased their prices. While the SII announced that the Central government would continue to get its quota of Covishield at Rs.150 a dose, State governments would have to pay Rs.400 a dose. Vaccinations sold through private hospitals would cost Rs.800 a dose.

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SII CEO Adar Poonawala, as has been his wont, “clarified” that the offer of Rs.150 a dose to the Centre was only for a limited period, applicable to stocks in the pipeline. BBIL announced that it would provide Covaxin to the States at Rs.400 a dose and to private hospitals at Rs.1,200 a dose. As the second wave of COVID-19 began to take a heavy toll and criticism against the Centre’s policy gathered momentum, both companies lowered the price of their vaccine towards the end of April, which indicated the enormous margins the duopoly enjoys. While SII announced that the price of its vaccine to the States would be reduced to Rs.300 a dose, a reduction of 33 per cent, BBIL said it was revising its price to Rs.400 a dose—a reduction of 25 per cent. Crucially, both companies did not amend the price at which the vaccine would be available to private hospitals.

It became apparent that the so-called “market-based” approach of the government would compromise India’s attempt to fight the pandemic. Indeed, the fact that no Indian vaccination programme—India has been relatively successful among the developing countries in its vaccination drive over a long period of time—had ever relied on priced vaccines, made this odd. Also, the fact that no other country has priced a COVID vaccine places India in splendid isolation in a world battling the pandemic. The simple point that the vaccine is not a regular “commodity” that could be left to the wisdom of the market was obviously lost on those who devised this “lone ranger” approach.

Asked whether SII was making profits by selling the vaccine to the government at Rs.150 a dose, Poonawala told NDTV on April 6, “Yes, absolutely.” He spoke candidly about the possibilities of making “super profits” after a few months. It is estimated that about 97 per cent of the cost of the vaccine that AstraZeneca is manufacturing—for which SII is the sole production contractor in India—was funded by public funds in the United Kingdom, the United States and Europe. In fact, the development of the vaccine (called Covishield in India) was initiated by Oxford University. AstraZeneca had promised to sell the vaccine on a “no-profit” basis. It is obvious that Poonawala sees opportunities for selling Covishield in India at prices based on “international” prices, aligned to prices of competing vaccine candidates. The most striking aspect of the pricing drama was that the announcements came from the two private companies, with the Ministry of Health remaining a passive spectator. Official policy was notified through Poonawala instead of elected representatives.

Abandoning the levers

The case of BBIL’s vaccine is even more curious. It is well known that Covaxin arose from the isolation of the SARS-CoV-2 strain by the Pune-based National Institute of Virology, which is part of the Indian Council for Medical Research (ICMR). The ICMR had transferred this strain to BBIL for development and manufacture. Although the details of the contract between BBIL and the government are not available, it is obvious that the government has significant leverage over BBIL, arising from the fact that it holds a significant part of the intellectual property. As Professor R. Ramakumar of Tata Institute of Social Sciences, Mumbai, has pointed out, the language in the correspondence between the ICMR and BBIL from July 2020 indicates that the government’s leverage is indeed substantial.

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Moreover, the decision to allow three publicly funded institutions—Haffkine Institute, Indian Immunologicals Ltd and Bharat Immunologicals and Biologicals Ltd—to produce COVID vaccines indicated that the intellectual property belonged, significantly at least, to the public. How could the government hand over the know-how to other entities if it did not own it?

Ramakumar analysed the authorship of six peer-reviewed journal publications on Covaxin and found that in all of them there was evidence that scholarly participation or financial backing had been provided by individuals or institutions supported by the Ministry of Health and Family Welfare or the ICMR. Now, if that does not provide evidence of public support for a project, what does?

It is obvious that the contractual details between BBIL and the government need to be made public immediately. This raises many questions. Why did the Modi government not use the leverage it had with its intellectual property to scale up production at a quicker pace? Why did it not use its leverage with BBIL to price its vaccine lower? Why did it not use its leverage to bargain harder with SII on its prices? In particular, it is clear that the government has not capitalised on using its stake in Covaxin, which currently accounts for less than 10 per cent of vaccines delivered in India, to not just expand capacity but use that to take control of prices. In short, using its leverage with Covaxin would have given it leverage in its dealings with SII, on not just capacity but also on prices.

Hubris as policy

The claim that India is the ‘Vishwaguru’ in the world of vaccines misses the significant variegation in the world of vaccines. India may have world-class capacities and capabilities in the generic vaccine business, but in the immediately relevant area of pandemic vaccines, India is by no means the frontrunner. According to Neeta Sanghi, an expert on supply chains in the pharmaceuticals business, although India provides 60 per cent of all vaccine supplies to UNICEF, its share of capacities in global COVID vaccine production is just over one-fifth.

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Neeta Sanghi pointed out that the government ought to have ascertained capacities and planned for the required scales of demand and supply. Had it conducted such an exercise last year, it would have realised “that India was woefully short of manufacturing capacity to vaccinate its own population. This critical activity was either not conducted or the gap between demand and supply was deemed unworthy of urgent action—both simply unpardonable,” she observed. Hubris seems to have pervaded the government’s approach to vaccination, just as in most other aspects of governance in the last year. This approach was explained by the dogged refusal to allow other vaccine candidates entry into India. All critics were dismissed as vassals of multinational corporations or as “anti-nationals”.

Currently, SII has a capacity to produce about 70-100 million doses of vaccine a month; it is currently producing about 85 million doses a month. BBIL’s capacity, recently enhanced, is much lower, at 58 million doses a month; however, the company plans to turn out only 30 million doses in May 2021. This means that even at full tilt the two producers can supply 6 million doses a day; they are currently producing at a little over half of their combined capacity. Meanwhile, the daily vaccination numbers have been dropping in recent weeks, which seems to indicate that no additional capacity will be available immediately, barring the Russian Sputnik V. Production, which may have already been close to this upper bound, appears to be slacking with no hope of a significant increase in capacity until at least July. Daily vaccination rates, which were about 3.7 million in early April, dropped by more than 30 per cent to 2.5 million a day by April 28. The Modi regime has been claiming that the Indian vaccine drive, the biggest in the world, has now covered 150 million people. Beneath this large number lies the fact that less than 10 per cent of the targeted population has received one dose and just a little over 2 per cent have received both doses. Clearly, the entire vaccination programme is heading towards a severe supply constraint. The health economist Rijo M. John estimates that the average rate of vaccines delivered each day needs to increase by a factor of three in order to cover the entire 18+ population by the end of 2021.

Skewing the scales

In hindsight, it appears that the Modi government has deliberately and methodically prepared the ground for both SII and BBIL to thrive. The launch of the vaccination drive in January provided the two companies with an assured “market”. With competition from other vaccine candidates ruled out by fiat, the two companies were able to operate capacities at scale without having to bother about the risks that a fully standalone private operation would have entailed. To now argue that private investment should be provided returns for risks undertaken ignores this fundamental reality of the Indian vaccine rollout—that this is not just another “commodity”, instead it is based on significant state-sponsored support. But above all, this endangers the Indian effort to gain control over the pandemic through a full-blown vaccine rollout.

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The discussion on vaccine prices without taking into account this huge supply constraint makes it a meaningless exercise. This is where there is apprehension that the two companies will mint money at the cost of public misery. One of the favourite arguments of the defenders of the policy is that the States will foot the bill and that people will not have to bear the burden. This is not even ingenious, for several reasons. First, the States, already burdened by the necessity to invest in their creaking health care systems, would have to divert significant portions of their budgets to meet the costs of the vaccination drive. The ongoing scramble for hospital beds, oxygen and drugs has demonstrated that publicly-run facilities and services are the ones that have borne the bulk of the burden. Second, ethically speaking, how does it make sense to say: “The monopolist needs to make super profits, and as long as the State governments are the ones bearing the burden, it is fine.”

The vaccine policy’s latest orientation is a cynical attempt to transfer not just the burden of vaccination but the blame for the failures of the Modi government to the States. The idea is that once the States bankroll and implement the rollout, the responsibility of sourcing supplies and distributing the vaccines will fall on them. However, it is not clear how and on what terms the Centre has asked the two firms to supply the vaccines. Since SII and BBIL already have a contract with the government, and since these contracts are much more than supply contracts, which is what would apply to the States, it is obvious that the Modi government has far greater leverage with the two companies. Moreover, there is no clarity on how vaccine deliveries will be prioritised, especially in a shortage situation, because of the favourable deal the government has handed the two companies. It is thus obvious that the Centre holds all the aces. The States will have to find their own way even as they face public criticism.

Arbitrary allocations

The Centre’s vaccination allocation methodology, if it can be called so, has followed no normative standard to determine how much each State will be allocated. A recent study by scholars at Ashoka University revealed serious anomalies in the allocation of vaccines. They examined vaccine allocations relative to two factors—the ratio of vaccine allocation to confirmed COVID cases and the States’ share of the 45+ population in the overall population. Significantly, they found that Maharashtra, Kerala and Delhi (all non-Bharatiya Janata Party (BJP)-ruled States), were among the lowest in terms of allocation per case (less than 5 vaccines per case). The biggest beneficiaries were Gujarat and Rajasthan where the ratio was almost 30 vaccines per case. Although Kerala, Tamil Nadu and Maharashtra have a higher percentage of the elderly population (45+), the allocations to these States were far lower than those made to Gujarat where the elderly account for a significantly lower proportion of the population. It is thus obvious that no normative standards or logic has determined the allocations to States. Bad as this is in normal circumstances, it is a sure-fire recipe for a disaster when there is a shortage. This gives the Modi government another lever to rein in the States. In the absence of normative standards governing the distribution of vaccines, an arbitrary system will thrive when severe shortage of vaccines is a reality.

The opening up of the 18+ age group to the vaccination drive has already commenced disastrously. According to the Cowin portal, more than 12 million people in this age group had already “registered” by April 28. It did not, however, say that the mere act of “registration” will not enable them to schedule an appointment. Meanwhile, those who have already been administered one dose will require allocations on a priority basis, especially those whose second dose is due soon. In typical style the Modi regime (recall the disastrous demonetisation of 2016 when the Finance Minister realised rather late that the ATM machines cash trays could not accommodate the new, larger notes), has resorted to gimmicks in a desperate effort to distract public attention from its blunders.

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On May 1, the day on which vaccination was supposed to commence for those in the 18-44 age group, chaos reigned. While the Centre remained mum, Maharashtra, Andhra Pradesh, Madhya Pradesh, Delhi, Karnataka, Goa, Punjab and West Bengal, announced that vaccination for people in this age bracket would start later. Gujarat, which has received a disproportionate share of vaccine supplies, announced that vaccination for the 18+ target group would start on May 1 in 10 districts.

The only entities benefiting from the vaccine regime are the two contractors. This is not just a matter of allowing two companies to profit from the pandemic, it actually compromises the battle against the pandemic. The vaccine is an attempt to artificially provide at least a degree of immunity against the disease. But this is not just about saving individual lives. Instead, there is a collective stake in maximising the reach of the vaccine within the quickest possible time to arrest the spread of the pandemic. It is obvious that a dual pricing regime will allow the private companies to divert supplies to areas that offer the highest profit. After all, what else could be the logic of a capitalist enterprise? Thus, as supplies are diverted to private hospitals (or even the black market as we are seeing in the case of any drug that is even remotely associated with COVID treatment), more and more people with lesser means would be unvaccinated. To expect households to divert a significant proportion of their incomes to vaccines at a time when incomes have shrunk is unreasonable.

Endangering Indians

This is not just a question of economic or social justice, it is not the right thing to do in a pandemic situation. As more and more people fall through the cracks of a pricing regime that is egregiously skewed towards maximising profits, the critical mass to arrest the pandemic will prove to be ever elusive. Meanwhile, those who are forced to miss the vaccine bus will continue to infect others or themselves suffer the illness, ensuring that the virus stays in the game. The extent of vaccine hesitancy, driven by plain obscurantism and superstition, has been a significant stumbling block. It appeared that the Indian drive had just surmounted some of the hesitancy; the shortages and high prices are likely to set the clock back significantly.

There is also the regional dimension to contend with. Bihar, Uttar Pradesh and Madhya Pradesh are among the poorest performers in terms of COVID vaccinations. But these are also reservoirs of India’s migrant labour, who flock to urban centres for work. So will the disease, which has already invaded large swathes of rural India. The vaccine policy, by fragmenting efforts and transferring the burden to less well-endowed regions of the country may only allow the disease to fester. The call, “Nobody Is Safe Until Everyone Is Safe” was not just empty rhetoric. It applies to India as much as it does anywhere in the world.

The pace of the vaccination drive has been alarmingly slow and has sputtered in recent weeks. On the basis of an analysis of the vaccination data, Tejal Kanitkar, a researcher at the National Institute of Advance Studies, Bengaluru, estimates that many of the poorer States will take unconscionably long to cover fully the 18+ population. She estimates that Uttar Pradesh and Madhya Pradesh may take 70-72 months (almost six years) to cover the target group at the current rate. Bihar is projected to take 47 months, Jharkhand 60 months and Odisha 35 months. In fact, at current rates even a more developed State like Tamil Nadu is projected to take 33 months to cover the target population.

Also read: Second wave of COVID-19 in India

By the end of April, the Centre had supplied 16.16 crore free vaccine doses to the States. The Centre’s failure to communicate to citizens who are awaiting their second dose that they will be given priority in a tight vaccine supply situation has thrown the entire vaccine drive into disarray. If those who have received the first dose are not vaccinated within the fast-closing time window for the second dose, there is a real danger that a significant fraction of the 16 crore vaccines already distributed would be wasted, causing a setback to the Indian vaccination programme. The scale of a universal COVID vaccination drive is not as costly as it is made out to be by the Modi regime’s fans. It is estimated that the cost could be in the range of Rs.50,000-Rs.80,000 crore, depending on the age group that is targeted. As with all things with the Modi regime, big numbers do not mean much, their relative context matters. Finance Minister Nirmala Sitharaman had allotted Rs.35,000 crore in her last Budget. That makes it a much smaller requirement of Rs.15,000-Rs.45,000 crore. What is this sum when compared to the nearly Rs.8 lakh crore loss that the economy is likely to have made in 2020-21 as a result of the contraction of the economy? A universal free vaccine, combined with a sterner approach to the leading monopoly, is just the right solution in a pandemic.

Unlike the Modi regime, which has been supremely smug, people are worried about the many things they do not know about the virus and the illnesses it spawns. The eminent virologist Gagandeep Kang said recently that she was keen on knowing the efficacy levels of the vaccine in the real world. More importantly, she said she was eager to see how long the vaccine conferred immunity. So, we do not know if and when we will need booster doses for the vaccines that are now available. In the face of these imponderables, the Modi government’s move to hand over on a golden platter the Indian vaccine “market” to two private companies is a wanton act of treachery.