Modi govt's vaccine policy allowing Serum Institute to earn 'super profits': Experts

By Sumi Sukanya Dutta | Express News Service | Published: 23rd April 2021 07:14 PM
Serum Institute of India CEO Adar Poonawalla (Photo | PTI)

NEW DELHI: The new Covid vaccination strategy, announced earlier this week, has allowed the Serum Institute of India (SII), a private firm, to dominate the vaccine pricing and policy and earn super profits, experts have pointed out.

It is also in contradiction of an earlier stated stand by the National Expert Group on Vaccination Administration for Covid, which was in the favour of a single point of procurement for vaccines, many felt.

The shift in the policy by the Centre now means that states and private hospitals can directly procure 50% of the supplies from vaccine makers while the Centre will aim its drive to fund jabs for those above 45 at select vaccination centres.

SII, whose product, Covishield, has been the linchpin of India’s Covid vaccination drive so far with over 90% share in total 13 crore plus shots administered so far, has said that it will make available the vaccine at Rs 400 per dose to states and Rs 600 per shot to hospitals from May 1 when all adults in the country will qualify for inoculations.

The company had signed an agreement to supply nearly 11 crore vaccine doses -- between January to April -- at Rs 150 per dose to the Centre and its CEO Adar Poonawalla in an interview earlier had indicated that it was recovering the production cost at that rate and was even making normal profit.

The latest pricing announcement, however, makes it clear that the company is now looking to earn a greater margin on the vaccine, originally developed by AstraZeneca-Oxford University through 97% public funding by the UK government and the European Union.

SII had earlier announced that it would want to sell Covishield at Rs 1,000 per dose in the private market, pointed out R Ramkumar, an economist with the Tata Institute of Social Sciences in Mumbai who has been closely following the development.

“Perhaps it could not do it in one go but is clearly looking to maximise its profit and the Centre has succumbed under the pressure,” he said.

He also stressed that the government, even considering that the vaccine will now cost Rs 400 per dose, will have to spend just Rs 53,000 crore—or 0.2% of the GDP—to incolutate the entire adult population with two doses.

ALSO READ | Preliminary study shows Covishield protects against double mutant strain: CCMB director Rakesh Mishra

“Why should the government shy away from doing that in the large public good and lead to a chaos that is about to unfold once states starting vying for the vaccine during a pandemic situation?” he asked.

Epidemiologist Jammi N Rao dubbed the policy of having two or even 3 different prices for different purchasers as “mad”.

“From a fiscal point of view state or central government makes no difference, it is ultimately the same taxpayer funded pot of money,” he said and made four points to argue against a system of multiple channels of procurement and differential pricing.

Firstly, it breaches the principle of universality, Rao said.

“There is now almost unanimous agreement that a quick and efficient programme of vaccinating the majority of the population offers the best, perhaps the only, means of escaping the chokehold exerted by waves of Covid-19 cases on normal life and economic activity,” he reckoned.

Secondly, if states are forced to do their own procurement at an additional cost they may well be pushed into charging people for the service, Rao argued saying that it will create a new disincentive for people already impoverished by the economic slump and loss of livelihoods according to him.  

Also, said Rao, by allowing manufacturers to set their own prices, the country loses the ability of bulk procurement and price negotiations to get the most cost-effective deal.

The fourth argument put forth by him is that the new procurement policy subtly glosses over the cash injection that the Indian taxpayer has made into the two main vaccine manufacturers—the other one being Bharat Biotech.

 Finance Minister Nirmala Sitharaman had two days back announced that the Centre would fund capacity expansion to the tune of Rs 3000 crores to Serum Institute and Rs 1575 Rs crores to Bharat Biotech.

“While this is absolutely to be welcomed, one should remember that this cash injection was on behalf of the Indian tax-payer. It is justified therefore to expect that the Indian government -- it makes no difference whether it is Centre or states gets a preferential price for the vaccines that the extra capacity will produce,” Rao stressed.

Some others meanwhile expressed dismay at the SII decision to introduce differential pricing for governments and the private market.

“I strongly disagree with that unilateral decision,” said K V Babu of the Association of Doctors for Ethical Healthcare.
 

Tags : Covid vaccination Serum Institute Covishield Covid pricing

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