New Vaccine Policy: Can States Achieve What Modi Couldn’t?

As the centre’s stranglehold on vaccine supply eases, will it lead to more sellers, wider coverage or more chaos?

At a vaccination centre for employees of the income tax and the central goods and services tax  departments in Delhi, India, on  April 12, 2021. (Photographer: T. Narayan/Bloomberg)
At a vaccination centre for employees of the income tax and the central goods and services tax departments in Delhi, India, on April 12, 2021. (Photographer: T. Narayan/Bloomberg)

By permitting the participation of states and the private sector in procurement and delivery of vaccines, has the central government’s phase 3 policy made way for an acceleration of the Covid-19 national vaccination programme or has it simply passed on the burden to states, private entities and citizens?

Former Health Secretary K Sujata Rao cautioned this ‘liberalised’ vaccine policy will raise more questions than it answers.

Interstate infectious disease control is on the concurrent list and so is a shared responsibility, she said in emailed remarks to BloombergQuint.

“These past 73 years, Government of India has been supplying drugs and vaccines for infectious diseases under the National Program to the states. This is the first time I am seeing, and at such a critical time, central government abdicating its responsibility and leaving the states to buy their own vaccines at a price to be determined by the suppliers and at a price to be fixed by the companies! Never heard of anything more preposterous than that.”

That said, India has so far vaccinated 9.4 people in every 100, below mainland China’s 14, Brazil’s 16, Turkey’s 25 and the United States’ 64, according to data tabulated by New York Times and sourced from Our World in Data project at University of Oxford. The world average is 12.

As yet, 1.3% of our population is fully vaccinated.

New Vaccine Policy: Can States Achieve What Modi Couldn’t?

The numbers may not fully represent the logistical challenge of vaccinating a population of over 100 crore adults, but they make clear the pace needs picking up. The ferocity of the second wave has underscored that urgency.

If the central government is not up to the task, can sharing the burden with states and private sector accelerate the vaccine rollout?

Who Will Vaccinate Whom?

HCW, FLW and 45+

So far, only health care workers, frontline workers, and those above 45 years of age are eligible for vaccination — let’s call them target group 1.

That’s an estimated 28 to 30 crore people. They’ve received 13 crore doses as on April 21. 1.84 crore people have received both shots.

The central government has been procuring vaccines manufactured locally, by Serum Institute of India and Bharat Biotech, and allocating them to states to administer. These vaccines are available free at government hospitals, whereas private hospitals can charge up to Rs 250 per jab, of which Rs 150 goes to the centre.

Serum Institute has supplied the centre 10 crore doses and committed to supply another 11 crore in the next three months, a company spokesperson said. Bharat Biotech is reported to have supplied just over 1 crore doses and is committed to another 9 crore. The company refused to confirm or comment. That’s 31 crore doses supplied or booked.

As per the phase 3 policy announced last week, that becomes effective May 1, the centre has said it will continue to provide free vaccines at government hospitals for target group 1. These will hereon be provided to states based on criteria such as active cases, delivery speed and wastage.

Hence, this target group will continue to get vaccinated, free, but the speed will vary state to state, maybe more now than it has so far due to change in allocation criteria.

18-45 Years

In this new policy, the central government has lowered the age threshold for vaccine eligibility to 18 years. That means 87-90 crore Indians are now eligible.

But here’s the big change. The centre will not vaccinate those between 18 and 45 years of age, an estimated 60 crore people. That task has now been left to states and the private sector.

A few questions arise

  • Where will they procure vaccines from?
  • At what price will the vaccines be procured and who will bear the cost burden?
  • Other logistical challenges in ramping up the vaccine programme?

The biggest challenge is what will happen to the people who are under 45 years of age, K Srinath Reddy, president of the Public Health Foundation of India, said to BloombergQuint in a phone interview.

  • A very small number will be able to purchase vaccines directly from private hospitals irrespective of price.
  • Private entities, such as large companies, may pick up the tab for vaccinating their employees. But that’s barely 10% of the national workforce.
  • The rest will have to be vaccinationed by the states.

“Now, they have to depend upon the individual states to provide and the states would have to provide it free of cost. Would they have the wherewithal to provide it for so many people? Unless the price is also fixed at a level, because they will have to keep competing with the private markets. Then maybe a disadvantage would take place in terms of the price and even in terms of the amount of supply,” Reddy said.

Key Takeaway: The states and private sector now bear twice the burden the centre has all these months. And they have barely days to prepare for it.

New Vaccine Policy: Can States Achieve What Modi Couldn’t?

Who Will Supply Vaccines?

The central government will get 50% of all domestic vaccine production, as per the new policy.

50% of domestic vaccine production can now be supplied to states and be sold in the open market. Private hospitals will have to procure their vaccines from this share.

States and private sector entities can also import vaccines.

Vaccine Sources

The most recent data provided by Serum Institute’s spokesperson and Bharat Biotech’s press statement indicates current capacity is about 12 crore doses a month.

Serum Institute: 6 crore doses a month
Bharat Biotech: 5.8 crore doses a month

Serum intends to expand to over 10 crore by July. Bharat Biotech will receive a government grant of Rs 65 crore to expand to 10 crore doses by September.

The central government has also reportedly approved advance payments recently to both producers that may help fund further capacity expansion but those numbers are not discernable yet.

Such help should have been advanced months ago, said Rao. It will take three months before enhanced supplies kick in, she added.

I do not visualise hurdles, except the consumables that are to be imported and banned by some countries like the U.S. The MEA has to take up this issue on an emergency basis and help our companies get over these issues. There will be a time lag before the supply in sufficient quantities kick in. The worry is without waiting for the supply, we are creating the demand by making 18+ age groups also eligible.
K Sujata Rao, Former Secretary of Health and Family Welfare, Government of India

Russian vaccine Sputnik V will soon be in India, first imported by Dr. Reddy’s Laboratories Ltd. that expects to start supplying it by early June. As of now it has an agreement for a total 25 crore doses that will cover 12.5 crore people.

Six pharmaceutical firms have signed agreements with Russian Direct Investment Fund to produce Sputnik V in India — the target capacity is 85 crore doses a year or 42.5 crore people covered. “We are looking at producing 50 million doses (5 crore) or more a month of Sputnik V by this summer, or end of summer, in India,” Kirill Dmitriev, chief executive of RDIF, told Hindustan Times.

Then there are others in the fray — Cadila, which expects regulatory approval for its vaccine, ZyCoV-D, by June — will potentially ramp up capacity to 24 crore annual doses.

Besides, the new policy permits imports by states and private entities — but that will depend on availability of imported vaccines, regulatory clearance, supply chain requirements, etc. Vaccines from Pfizer, Moderna and J&J have only now been invited to seek emergency use authorisation from the Indian authorities.

Reddy cites the states’ experience last year in securing imported Covid tests, safety gear, masks, etc. to say “it's perfectly alright if they negotiate directly with the supplier because then it's a free for all...”

The key hurdle will be availability and unintended-but-inevitable competition between states and with the private sector to lock-in sellers.

Of course, there is a global supply constraint but then we’ll have to really see how that plays out in India if the private sector is willing to offer higher prices than some other country. Ideally, there should be equity within the country and equity across the globe...
K Srinath Reddy, President, Public Health Foundation of India

Key Takeaway: Lack of forward planning has meant any meaningful increase in vaccine supply, domestic or imported, will take at least till June.

Health workers administer a dose of the Bharat Biotech Ltd. Covaxin vaccine to an employee at the Central Revenue building in New Delhi, India, on April 12, 2021. (Photographer: T. Narayan/Bloomberg)
Health workers administer a dose of the Bharat Biotech Ltd. Covaxin vaccine to an employee at the Central Revenue building in New Delhi, India, on April 12, 2021. (Photographer: T. Narayan/Bloomberg)

The Vaccine Costs?

Serum Institute and Bharat Biotech have supplied vaccines to the central government at Rs 150 per dose.

In light of the new phase 3 vaccine policy, Serum Institute announced it will now charge central and state governments Rs 400 per dose and private hospitals Rs 600 per dose.

Bharat Biotech published prices on Apr. 24. It will supply to states at Rs 600 per dose and to private hospitals at Rs 1,200 per dose.

Imported Sputnik V will be priced at $10 or Rs 750, Dr. Reddy’s officials said in media interactions.

Free To Rs 2,400: What A Covid Vaccine Will Cost You

Given the limitations on government finances, both central and state, it would have been best if both negotiated together for low prices, PHFI’s Reddy said. He commented before Serum published its prices and was speaking on domestic and imported supplies.

“I think all states should be represented by the centre and the same price should be offered to the states as well. If they leave it entirely to the states, firstly, there will be a competition among states and secondly, there'll be a competition with the private purchasers.”

Multinational pharmaceutical companies are hard to negotiate with, warned Rao. Their terms are difficult to agree to and that is why for the H1N1 vaccine, India’s negotiations with Pfizer failed, she recounted.

“In vaccines it is always about quality and accountability of the supplying company towards any adverse event post vaccination — a responsibility they (MNCs) often do not like to accept. They also do not like doing bridge studies or subject themselves to our regulators, etc. So accountability and price often become difficult to negotiate. It is for this reason that only Government of India can firm up the agreements and allow import. It is a matter that cannot be left to states.”

Irrespective of cost, states will have to provide free or highly subsidised vaccines to improve innoculation rates and save lives and livelihoods.

Some such as Uttar Pradesh, Madhya Pradesh and Assam have rushed to announce free vaccination for all above 18 years. Others like Maharashtra reportedly intend to divert funds from other programs to speed up vaccinations. Yet others like Kerala are assessing the budgetary impact.

On social media, economists are suggesting ways states, already cash-strapped, could raise funds to support large-scale vaccination programmes.

India Inc. has sought centre’s permission to use corporate social responsibility funds for public vaccination.

Key Takeaway: States will need resources to fund the vaccine rollout, without which the pace may slow even further as opposed to picking up.

Vaccines For All Over 18 Years Of Age To Cost Just 0.36% Of GDP, Says India Ratings

Need For Centre-State-Private Cooperation

Besides vaccine supply, delivery infrastructure will need to be ramped up to accelerate and scale vaccination. That means more vaccine centers and vaccinators.

Currently 60,637 government and 6,664 private cites are conducting vaccinations. Guidelines are available to operationalise vaccination centres at work places.

“I think you can easily train a large number of people to give injections and even watch for side effects. But whether current regulations will permit that or not I do not know because there are a lot of regulations about who can give an intramuscular injection and who can’t,” said PHFI’s Reddy.

Besides, a more dispersed vaccine programme, run by multiple entities, will need sharper coordination on data collection, of registrations and adverse reactions.

Already, Serum Institute has requested all companies and private individuals to access vaccines via state and private health facilities.

States will also need to work closely to ensure no gaps open up - for instance, migrant workers are vaccinated irrespective of domicile.

“I think these are issues which are not insurmountable but need to be ironed out,” Reddy cautioned.

Key Takeaway: Without coordination between the centre, states and private sector on price, supply and delivery of vaccines there could be chaos as is being witnessed with oxygen supply right now.

So, How Long Will It Take To Vaccinate India?

Centre has limited its role to vaccinate 30 crore people. That’s 60 crore jabs, 31 crore ordered. 13 crore jabs administered since Jan. 16.

States and private entities now have to vaccinate 60 crore people. That’s 120 crore jabs. Orders will be placed only now.

The current domestic vaccine production capacity is approximately 12 crore doses a month. Current visibility on expansion indicates 21 crore doses a month by July. Imports additional.

These numbers align with BofA’s ‘middle’ case scenario.

“On overall net basis, we forecast 34%, 40% and 48% of population getting vaccinated by 2021 in bear, middle and bull scenarios respectively,” said a BofA Securities report.
New Vaccine Policy: Can States Achieve What Modi Couldn’t?

With more buyers entering the fray, it’s possible supply will rise faster than earlier anticipated. Between states and corporates if urban, dense areas can get speedy, comprehensive vaccine coverage that may retard the virus spread as well.

If India is able to ramp up from the current 25-30 lakh vaccine shots a day to 50 lakh a day, 50% of the population could be vaccinated by the end of the calendar year, estimates HSBC.

New Vaccine Policy: Can States Achieve What Modi Couldn’t?

Will that be enough? The proportion of the population that must be vaccinated against Covid-19 to begin inducing herd immunity is not known, the WHO stated.

Ideally, experts say, the central government ought to have planned better. Even now it can help states with coordination, funding, etc. But states will bear a substantial part of the vaccination burden. So will the private sector, but on a voluntary basis.

If the three work together there’s a slim chance of success. Otherwise, citizens will pay the price.

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Note: This story has been updated to include details on Covaxin prices that were announced on Apr. 24.