Centre Still Controls India’s ‘Liberalised’ Vaccine Policy

The central government continues to have control over doses states can get from Covid-19 vaccine makers in India.

A notice indicates that vaccine is out of stock at the Covid-19 vaccination center at the BKC Jumbo Covid Centre. (Photographer: Dhiraj Singh/Bloomberg)
A notice indicates that vaccine is out of stock at the Covid-19 vaccination center at the BKC Jumbo Covid Centre. (Photographer: Dhiraj Singh/Bloomberg)

India’s central government claimed to have lifted its singular control on supply of Covid-19 vaccines under its ‘liberalised’ policy but it continues to dictate how many doses states can procure from manufacturers. And that’s when the nation faces a shortage of vaccines amid a severe second wave of the pandemic.

On April 19, the central government announced the opening of vaccinations for the 18 to 44-year-old population. The new policy, effective May 1, allowed Indian vaccine manufacturers to provide up to 50% of their supply to the centre and the remaining 50% to states and private players in the open market.

Under the new policy, states receive vaccines from two channels:

  • Free doses from the central government to vaccinate those aged 45 and above, and frontline workers. These are allocated from the centre’s 50% share based on infection rate, vaccination rate and wastage.
  • From the remaining 50% states can procure doses directly from the manufacturers to inoculate population aged 18-44 years. They have to buy these at a pre-declared price.

But there’s a catch. The April 19 policy suggested states were free to book doses within the overall 50% quota, based on their individual needs and pace of vaccination. But, in reality the centre has placed two more restrictions on them, as was revealed only when the Supreme Court asked the Modi government to share policy details.

1. The centre has limited each state’s direct procurement based on population.

2. That procurement is further to be shared 50% with the private sector in that state.

Effectively, the central government continues to control the quantity of doses states can get from the manufacturers.

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What Centre Informed Supreme Court

In an affidavit submitted in the Supreme Court, Prime Minister Narendra Modi's administration said:

It is submitted that though the States are procuring the vaccines from the manufacturers, the Central Government has, in consultation with the vaccine manufacturers determined the pro-rata population of each State in the age group of 18-44 and each State will procure only that quantity so that there is no disparity in availability of vaccines between the States inter-se either based upon difference in their bargaining power or otherwise.

Meaning, states can only buy stock in proportion to their population to ensure equitable distribution across states. While that may seem fair, such a policy penalises states with a faster vaccination rate as they will run out of doses sooner.

“In principle, the total quantity needed for each state may be fixed as per the population-based norms. Within that limit, states which are vaccinating fast can periodically draw as per need and speed,” K Srinath Reddy, president of the Public Health Foundation of India, told BloombergQuint. “However, if there is an overall shortage, such flexibility will be impeded.”

And a vaccine shortage is precisely what India is facing. The nation's expanded vaccine drive for 18 to 44-year-olds has been off to a slow start. Thirty states have started administering shots to this age group. But only eight of them have crossed the 1 lakh mark. Overall, just 34.66 lakh individuals in the 18-44 age group across India have been vaccinated, as per May 12 data.

With the centre’s supply itself running thin, it has directed states to prioritise those in need of a second dose. Maharashtra, one of the fastest vaccinating states, has had to suspend its inoculation for the 18-44 category indefinitely as it diverts its stock for those above 45. Karnataka, too, has followed suit.

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The ‘liberalised’ policy is a “misnomer” when it is still being largely orchestrated by the centre, Antony Kollannur, a former director at the State Health Resource Centre in Chhattisgarh, told BloombergQuint.

“It is a restrictive policy,” said Kollanur, who has previously worked for UNICEF India. “States have to generate funds, deal with manufacturers, buy it and plan the implementation of vaccinations. Then why should the centre interfere in it as a ‘Big Daddy in the process,"

Reddy and Kollannur questioned why the centre itself could not procure the vaccines and distribute them in an equitable manner to the states.

The 50-50 Conundrum

When India’s ‘liberalised and accelerated’ vaccine policy was announced in April, there was no explicit mention about the centre setting a quota for states even when they buy vaccines directly from manufacturers. Neither were there any limits on purchases by the private sector.

But the central government's affidavit to the Supreme Court reveals the catch:

Out of the 50% quota allotted to each State, the division is made on 50%/50% basis. In other words, from out of the 50% allotted to the State, 50% will go to the State [calculated on pro-rata basis based upon the population of age group of 18-44 years] and the balance 50% will go to the private sector based upon the contracts between private sector and vaccine manufacturers, it said.

The Modi government argues that the private sector would facilitate better access and reduce operational stress on government facilities.

But this also means states grappling with shortage of doses for the 18-44 group will have to share half their quota with private hospitals. That may end up prioritising private vaccinations at the expense of state-run free programme. And it could impede the overall pace of inoculation.

“State governments should have a larger share than private hospitals whose presence is uneven across states and within states,” Reddy said. “By giving a large share to private hospitals, on par with states, an induced demand will be created for private vaccination.”

There would be an adverse impact on the supply chain capacity and flow rates of states, as we are already seeing.
K. Srinath Reddy, President, Public Health Foundation of India

The implications of such a “faulty policy design” could lead to wastage as private hospitals may have more vaccines than they have demand, Kollannur said. Most of the immunisation programmes in India have been dependent on free vaccines through the public sector where cold chain maintenance is better due to the availability of ice-lined refrigerators, he said. “When you overstock excess vaccine in the private sector, it could result in wastage, and also lead to overmarketing.”

The Supreme Court, too, has said that Modi government’s vaccine policy would create “chaos and uncertainty” by pushing the burden of procuring vaccines on states.

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Dynamic Policy

The central government, however, in its affidavit said the policy and process is “dynamic” to ensure changes if more doses of vaccines are available within or outside India. Its allocation for states may also undergo a "rational change" based on performance, it said.

Moreover, the government has not put any restriction on states to float global tenders for vaccines. Mumbai’s civic body is already looking to import one crore vaccines as it prepares for a third wave of Covid-19.

Reddy suggested that one way to improve the policy is by forming a common purchase committee between the centre and states to negotiate a single price and fair supply quantities with domestic and international suppliers. “The quantity needed by each state should be fairly assessed, and supplies spread equitably over time as they flow in from domestic and international sources. As the response needs to be unified, as one country; the responsibility should also be shared and not split.”

“Whatever the mechanism, each state must get its due for protecting the people.”

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