'Much more space must be given to public health experts in designing the vaccine strategy'

Technocrats and businesspersons seem to have disproportionate influence in designing our vaccination policy and public health experts need more say, observes Reetika Khera. The development economist and IIT Delhi professor suggests compulsory licensing to open up supply

After the Union government rolled out its new vaccine policy last week, there has been debate surrounding the pricing, supply, and subsidies for the jabs.

According to the announcement dated April 19, Indians above 18 years will be eligible for vaccination from May 1. 

In the earlier process, the Centre procured vaccines from Serum Institute of India and Bharat Biotech and distributed it to state governments, who made it available to vaccination centres. The current process calls for vaccine manufacturers to supply 50 per cent of monthly released doses to be allocated to the government of India, and 50 per cent to be assigned to the open market, where state governments and private hospitals may buy the vaccines directly from manufacturers at prices set by them. This situation raised several questions about how supply would be prioritised, how much the Centre would have to spend versus the states, and how much Indians would potentially have to pay for vaccines. 

Mid-Day.com spoke to Reetika Khera, development economist and associate professor at IIT Delhi, to understand the concerns and implications arising from the policy. 

Here are edited excerpts from the interview: 

How might the Government of India’s current vaccine strategy impact state economies and public health in the Covid-19 crisis? 

A fundamental point is being missed in the public discussion about vaccination in India. There are “positive externalities” associated with vaccines: this means that if I get vaccinated, not only do I benefit from it, others around me also benefit. For such positive externalities, a standard prescription in economics is a government subsidy. 

It is in everyone’s interest right now to push for vaccination for all. Remember, to be fully effective, the Covid-19 vaccination requires that 50-80 per cent - the herd immunity threshold - of the population be vaccinated. 

There are three major hurdles. The first is a supply bottleneck stemming from the fact that only two producers are allowed to manufacture the vaccine. Serum Institute of India (SII) and Bharat Biotech. The intellectual property rights (IPR) regime prevents other Indian manufacturers from producing it. There is a provision that allows us to get around this bottleneck. The government needs to use compulsory licensing (CL), a provision in the WTO (World Trade Organization) that allows governments to grant a license for production without the consent of the patent owner.

The supply bottleneck in turn is creating the second problem - differential pricing. SII plans to sell the same vaccine at Rs. 150, Rs. 400 and Rs. 600; Bharat Biotech has announced that it will sell its vaccine at Rs. 600 to the state and at Rs. 1,200 to private hospitals. Such differentials amount to price gouging. 

IPRs are creating artificial shortages and hurting a positive feature of the market (whereby supply would catch up with demand quickly). For Covid-19 at least, patents must go.

As if price and supply hurdles aren’t bad enough, the government is also creating technological hurdles. A pandemic is the wrong time to test beta versions of new technologies (e.g., facial recognition/photo verification or pushing Aadhaar in other ways). In fact, it is criminal.

If the vaccine is not free, what kind of hurdles does it pose in the acceptance of vaccination? 

On the one hand there is vaccine hesitancy, for instance, due to the hasty manner in which the Bharat Biotech vaccine (Covaxin) was given approval. On the other hand, the large and unmasked gatherings at the Kumbh Mela, at election rallies and elsewhere, suggest that many people have not grasped the enormity of the situation, how infectious and deadly Covid-19 can be. That will translate into “vaccine superfluity”, i.e., people who believe that a vaccine is not required. Such people are unlikely to pay to get vaccinated. 

Further, if the vaccine is not free, many of those who want it may not be able to afford it. For instance, the price fixed for state governments, Rs. 400 per dose, by Serum Institute of India (SII) is higher than a days’ NREGA (National Rural Employment Guarantee Act) wage in most states.  

Half of the vaccines were earmarked for sale in the open market with the expectation that this will stimulate supply and free up resources to vaccinate the poor. What is your view on that expectation?  

Free markets will not magically solve public health problems. They cannot. In fact, markets often exacerbate them. We are witnessing catastrophic market failures right now: look at the supplies of basic medicines, oxygen, Covid tests, etc: supply isn’t matching demand, price gouging is widespread.

The market solution for vaccines is neither efficient nor equitable. For the vaccine, if Bharat Biotech is allowed to charge its proposed price (Rs. 1,200 per dose) from the private sector, not only will those who can afford it be losers, it will also mean that supplies to those who cannot afford it will be delayed (Bharat Biotech will obviously prioritise private orders). 

It is one thing to allow a private market in vaccines, but allowing SII and Bharat Biotech to charge whatever they like, in an international health emergency is completely unacceptable. 

What model should be followed by the government for an accessible and equitable vaccination process, both in cities and in rural areas?  

Ideally, the government should ensure free vaccination for all above 18 years – whether administered at government centres or privately. Further, it should negotiate a single price with all the producers (including those who will be allowed to produce it under compulsory licensing). The government must supply it free through its health centres. It must ensure that there is adequate supply at all public health centres (hospitals, community health centres and public health centres). It should be free, available on demand (including walk-in facilities) and without any conditionalities or stringent ID requirements. These measures will ensure equity and quick scale up.

Whether paid-for private vaccination should be allowed is the next question. Perhaps if the private sector charges the centrally fixed price, and serves the purpose of speeding up administration, it could be considered. Central control over the supply price is important, because if the private sector is allowed to negotiate a higher price with producers, manufacturers will prioritise supplies to the private sector, hurting the poor.

More broadly, much more space must be given to public health experts in designing the vaccine strategy (e.g., should there be priority groups, if so, who should be in it). Right now, technocrats and business persons seem to have disproportionate influence in these discussions.

In a crisis like this, what role do vaccine manufacturers have while setting the price for the vaccines? What kind of checks and balances are needed?  

To ease the supply bottleneck, we must immediately invoke compulsory licensing so that many more manufacturers can produce it. That might reduce prices (through increased competition) and will boost domestic supply. 

If there are more private producers, the cash flow constraints currently facing SII and Bharat Biotech can also be eased. If necessary, the government can help ease those using the Rs 35,000 crores that was set aside for vaccines in this year’s budget.

There is precedent for keeping the patent open: in the 50s, after Jonas Salk invented the polio vaccine, he was taken aback when he was asked who owned the patent. In response he said, “the people”. “Can you patent the sun?”, he asked. 

In the nineties, when AIDS was ravaging lives, Yusuf Hamied of Cipla agreed to supply medicines at $350 for a year’s supplies, when others were charging $8,000. This helped save millions of lives.This is in sharp contrast to what we’re seeing in India today.

Some have raised quality concerns if compulsory licensing is brought in. The Indian pharma industry is capable of producing these vaccines on massive scale while maintaining quality protocols. Thus, the government’s role here is to invoke compulsory licensing to stimulate production, get manufacturers to declare their manufacturing costs and regulate prices, and very importantly, ensure quality control.

What kind of effects will the current surge of Covid-19 have on people and the economy and how long will recovery take?

I believe the question to ask is how long will it take for people to recover from this economic, health and humanitarian shock. That depends on whether and to what extent the central and state governments rise to this challenge.

Last year, when the national lockdown was announced by the central government, there was reluctance to provide economic relief, yet the central government felt compelled to do something. This year, the central government is not imposing a lockdown, allowing state governments to devise their own localised curfews or lockdowns. As far as locking down is concerned, decentralised is a better strategy. 

Yet, this does not mean that the central government can wash its hands off its obligation to support states at this time. The only relief announced so far is to provide 5 kilo grain per person per month to those who have access to the PDS (around 80 crore people). But we saw last year that when economic activity is halted, the ones who need support the most are migrant workers. For them, the Centre needs to provide grain to the states so that they can either run community kitchens serving free food during lockdowns or provide dry ration kits to such people.

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