The COVID-19 vaccination drive is in full swing. The Centre had recently announced that both COVISHIELD and COVAXIN will be administered free of cost in all government-run facilities across the country, while it went on to set a ceiling price of Rs 250 in all private facilities. Out of this amount, private facilities will deduct Rs 100 towards service charge and the balance Rs 150 is what the vaccine companies will get.
Replying to an RTI filed by this reporter asking how and on what basis the vaccine prices were fixed, the Union Health Ministry refused to reveal any details citing Section 8(1)(a) of the RTI Act. The reply from Under Secretary DNK Kutumba Rao of Vaccine Administration Cell claimed that revealing this information "may prejudicially affect the strategic, scientific and economic interests of the State".
The pricing has upset the manufacturers. With Rs 100 going towards the private facilities, the COVID vaccine at Rs 150 is perhaps the cheapest in the world. After the government's announcement, pharma industry leader Dr Kiran Mazumdar Shaw of Biocon Limited took to Twitter, saying that "vaccine companies feel betrayed as price is too low to sustain. We are crushing instead of incentivising vaccine industry". The vaccine companies too, seem to have have conveyed their concerns to the government.
According to a senior manager from a leading pharma company, who wished anonymity, both Serum Institute of India (SII) and Bharat Biotech met government representatives on Wednesday to talk about the pricing and their concerns. An official working at the SII, speaking to this reporter on the condition of anonymity, confirmed that the meeting did happen but shared no details on what exactly transpired during the meeting. "We would not like to comment on this issue at the moment," the source said.
The government too, is tight-lipped about the issue. Speaking on the condition of anonymity, a senior officer at the Ministry of Health said that negotiations (on pricing) are an on-going process and therefore information cannot be disclosed. The source also said that all such matters are handled by the National Expert Group on Vaccine Administration (NEGVAC), which provides guidance to the government on all aspects of COVID-19 vaccination and they are the ones who are competent to decide disclosure/non-disclosure of any information relating to vaccines and vaccination.
Many in the pharma industry are hoping for a change in pricing. Dr Arjun Dang, CEO of Dr Dang's Labs warned that "we need to be careful not to stifle innovation". "Vaccine development has its own tremendous costs including that of scientific expertise and on-going further research to tweak the vaccine for new variants. These vaccines have been released post phenomenal due diligence done during lockdown situations where all companies have had to bear immense costs. We were the central safety testing lab for one of the vaccine's trial during the lockdown and I understand the immense costs and difficulty in logistics that we faced", he explained, while also complementing the government and government hospitals for "the great job they are doing".
Dr Dang said that he feels there are many who are willing to pay more for the vaccine as well as avail premium facilities like no queues or waiting time and home delivery of the certificate. "Ideally it should be absolutely free for patients who can't afford it but for patients who can afford and are going to private hospitals, the possibility of being charged more should be considered".
He, however, agreed that it is "somewhat understandable" that the government fixed vaccine rates at Rs 250, keeping in mind the masses and affordability and also because low vaccine rates might "aid in helping override the currently prevalent vaccine hesitancy", but hoped that in time, the government changes the price.
Professor NK Ganguly, former Director General of Indian Council of Medical Research (ICMR) said that at the moment, the price of the vaccines is a negotiated price and it will automatically change when the vaccines will be sold in the open market. While commenting on whether the price is sustainable or not for the companies, he said that "since the government has taken over major chunks of work like distribution of vaccines and cold-chain storage, the expenses of these companies have reduced significantly". "They will also be receiving large volume of orders for the Indian market and so the government would have obviously factored in these things before deciding the current price. Needless to say, when the vaccines come to the open market and are exported, they will be sold at the market price and global price. This would also profit the companies".
Noted public health and bioethics expert Anant Bhan was of the opinion that during a public health emergency, the government should ideally bear all the costs relating to vaccination, whether through public hospitals or private facilities and it should be fully free for the people.
On being asked if the current prices are reasonable for the two companies in terms of any profit, Bhan said that companies will try to maximise profit, and if the government has announced these prices, the companies would have obviously been consulted before the announcement. "SII did not spend much on Research & Development (R&D) as the vaccine was developed by Oxford-AstraZeneca primarily. Of course, there was some amount of R&D done for its COVISHIELD, too, in terms of local bridging study, but the cost is not as much as they would have had to spend if a vaccine were to be developed entirely on their own, or as part of the normal vaccine development timeframe of many years. Their major cost likely was the license fees that they would have paid to AstraZeneca to get the license to manufacture the vaccine in India".
As for Bharat Biotech's COVAXIN, it was made in collaboration with the National Institute of Virology (NIV), Pune an institution of the Indian Council of Medical Research (ICMR). "Both the company's costs would have significantly reduced due to the government's co-sponsoring of the trials and even taking on the job of distribution of the vaccines" Bhan said. Due to this, the government has more bargaining power and can fix cheaper rates for these vaccines. He seemed to agree with Prof Ganguly's view that due to the large number of population that has to be inoculated and given there is no choice of vaccines in the market at the moment, the two companies would get larger number of orders for their vaccines and therefore, make reasonable profits.
Bhan further pointed out that both the companies, especially Bharat Biotech will greatly profit from the vast amount of data it collects of people using their vaccines"especially around safety"and if all goes well, this would eventually be used for easier securing of marketing authorisation in other countries. This will ultimately secure them profits, he said, thus concluding that there is nothing unsustainable about the prices.
Malini Aisola, co-convenor of All India Drug Action Network, an organisation working to improve affordable access to and rational use of medicines, said that the government, in her view, was able to negotiate the price of Rs 150 (the price companies will get) per vaccine dose perhaps in keeping with the fact that neither of the two vaccines have full marketing approval at the moment. "There is scope for this price to reduce further once more vaccines are approved for use. Government would need to ensure that prices should not irrationally exceed the cost of producing the vaccines", she said.
Aisola also agreed with Bhan's view that the government should have borne all the costs of vaccination and provided it free of cost to beneficiaries. "At the moment individual people are bearing the cost of the vaccine and the private facility administration charges," she said.
Even in the absence of providing universal free-of-cost vaccination, Aisola says that the government has an obligation to ensure that vaccination remains affordable in private facilities especially given that more people may end of getting vaccinated at private facilities than at government centres.
Most experts seem to agree that the government has fixed the current price of Rs 250 only after factoring in the reduced expenses of the two companies, large volume of orders they are to get, affordability of the masses and the major hurdle of vaccine hesitancy it faces. Keeping the price low at the private facilities is also important because the government wouldn't want to create a barrier between people and vaccination due to unaffordability, especially since the private sector may play a major role in boosting the rate of vaccinations across the country. As talks continue between the government and the two vaccine companies, people can soon expect to know whether the government sticks to its current fixed price, at least for some time, or yields to the demands of the two companies. The government, however, has the upper hand.
The author is an independent investigative journalist. He tweets @OfficialSauravD