By keeping such tight price controls, govt is leaving little incentive for those delivering the vaccine to crores
Assuming the Rs 35,000 crore budget was for 30 crore persons, that’s Rs 1,166 per person or around Rs 500-600 per dose, including costs of transportation, storage and delivery; even that has now been halved!
Given India’s snail-like progress in its vaccination drive—India has administered just 1.04 doses per 100 people in the total population versus the US’s 22.5 and the UK’s 30.77—its vaccination strategy is making less sense by the day. If it wasn’t bad enough that the private sector was brought in too late—more so with the possibility of India being in the grip of another Covid wave—the government is applying such tight price controls that it is not clear if there will be enough incentive for the private sector to really scale up operations. Ironically, over the past few weeks, both the prime minister and the finance minister have been extolling the virtues of the private sector; yet, when push comes to shove, the government’s belief in price controls seems unshaken.
While the Rs 100 cap on what private hospitals can charge for delivery of each dose of the vaccine is probably grossly inadequate given the infrastructure that needs to be deployed, the overall cap of Rs 250 per shot assumes private sector vaccine manufacturers will sell the 200 crore or so doses that India will need at the current price; while hospitals are to get each vaccine at Rs 200, a government subsidy of Rs 50 makes their purchase price Rs 150 per shot.
That this is not adequate should be obvious from the fact that, while Serum Institute of India (SII) had spoken of providing 10 crore vaccines to the government at Rs 200 apiece, this was only meant for the poor and vulnerable; SII’s CEO had spoken of how he would sell at Rs 1,000 per dose in the free market. And keep in mind that SII had taken a big risk by starting production even before the trials of the Oxford-AstraZeneca drug had begun since it didn’t want to delay the vaccine for even a day after the trials were over and the necessary permissions were given; squeezing margins like this is hardly the way to reward private initiative. Indeed, while various manufacturers had asked for an indemnity against legal suits—given the hurried pace at which they had developed the vaccine to counter the pandemic that threatened to kill millions across the world—the government has not even given them that as yet; is it any surprise that manufacturers like Pfizer have kept away from India?
Indeed, it is odd that while the government talks of using the private sector for quick vaccine delivery, it has not spelt out its plans clearly even now. The budget allocated Rs 35,000 crore for the vaccine but didn’t specify how many persons were to be vaccinated. A December presentation by the government possibly offered some indication when it spoke of the need to vaccinate 30 crore persons; one crore healthcare workers, two crore frontline workers and 27 crore in the ‘prioritised age group’. Assuming the Rs 35,000 crore budget was for 30 crore persons, that’s Rs 1,166 per person or around Rs 500-600 per dose, including costs of transportation, storage and delivery; even that has now been halved!
While it is understandable that the government should want to keep costs down for the poor, why is this being done for everyone? Sadly, what is happening in the case of the Covid vaccine isn’t an isolated event, it is part of the government’s overall philosophy of trying to control prices; indeed, even while talking of scrapping the Essential Commodities Act (ECA) some months ago, the government retained the ECA, though with higher price-rise triggers. Pricing caps in the local market, to cite one example, are largely responsible for India’s pharmaceuticals industry exporting half its produce while a large part of the local market is flooded with sub-standard/spurious drugs. Even a pandemic, it would appear, hasn’t been able to change this approach.