Price-capping will affect vaccine production, innovation; central procurement at lower price helps them in any case
As per a report by The Indian Express, states are seeing red over Serum Institute of India’s (SII’s) decision to price its Covishield vaccine at Rs 400 per dose for procurement by them while it is currently selling to the Centre at Rs 150 per dose. Last week, the Centre moved to partially free up vaccine distribution; it will procure 50% of the vaccines approved while the remaining 50% will be available to the state governments and private players to procure. It also said vaccine makers must “pre-declare” the prices if they wish to sell in the open market, effectively nixing dynamic pricing. Soon thereafter SII, which has repeatedly clarified the Rs 150 price tag is simply “not viable”, published the new prices.
States should not really be crying foul over SII’s prices. The unfortunate truth is that, by capping prices right from the beginning of India’s vaccination drive, the Centre effectively discouraged private sector players like SII and Bharat Biotech from beefing up vaccine production. Instead, the Centre should have procured some quanta for the economically weaker sections, leaving the rest to be sold in the open market. Now, we are facing critical shortages; the number of vaccination centres has fallen from close to one lakh in the early stages of the vaccination drive to just under 70,000 on April 23.
Worse, with unofficial export curbs, the government has also put SII at risk of facing corporate litigation; AstraZeneca, from which SII had licensed Covishield, sent a legal notice to the Pune-based company over delays in contracted supply—nearly half of what SII produces will have to be exported—which, in turn, caused the European pharma giant to default on supplies to many nations. With EU contemplating action against AstraZeneca over this, chances are, SII will get scorched too. As such extending suppliers’ credit to both SII and Bharat Biotech is a good decision. States must appreciate that the price SII has set is meant to help it ramp up vaccine production and innovation—this is critical especially if existing vaccines prove ineffective against emerging strains of the virus..
While state finances have undoubtedly suffered, the Centre has footed the bill for extra allocation of grains to NFSA beneficiaries and has also provided a bailout for state-owned discoms. Indeed, the Centre has just announced another two months of expanded allocation of grains for NFSA beneficiaries to address the economic pain from the second surge and related restrictions. Most important, the vaccines procured by the Centre will ultimately be passed on to the states. That means the states may have to bear less than half the burden, what with open-market availability of vaccines likely to serve a significant, if not large, chunk of the population. With the GST transfer to the states for the last fiscal complete, they should focus on using their resources carefully to strengthen health infrastructure and vaccinate people. The Centre, for its part, also needs to course correct; the messaging from its April 19 announcement is that the vaccination it will undertake will be reserved only for the 45-years-plus, apart from healthcare workers and frontline workers. It should also ensure vaccinations for the economically vulnerable irrespective of age. This is a national healthcare crisis and vaccination reach must be a top priority for the Centre.