Speculations around pricing: Is Covid-19 vaccine a public or private good?

The UK has issued emergency-use authorisation to administer the COVID-19 vaccine developed by Pfizer-BioNTech, and over 50 hospitals are expected to begin vaccinations this week. A second vaccine by Moderna is awaiting similar authorisation. The US is expected to follow soon. India is still in the middle of clinical trials, and while Pfizer has applied for emergency-use authorisation in India, it may take longer to roll out.

As the vaccines arrive, how are they going to be distributed? Can individuals or private parties import them freely? What will the cost be? Will the disease progress the way it has, or will it peter out at some point as immunity kicks in?

To discuss this and understand the way forward, I am joined by Chandrakant Lahariya, epidemiologist, public policy and health systems expert, and co-author of the upcoming book, Till We Win: India’s Fight Against COVID-19 Pandemic, and Ajay Shah, professor, National Institute of Public Finance and Policy, who has written an article recently asking how the vaccine could be potentially distributed, and the market forces that could play a role in doing so.

Edited excerpts:

Dr Lahariya, how do you see the vaccine roll-out from the Indian standpoint at this time?

CL: We see a vaccine coming soon. It is going to happen in a week in the UK, probably another two weeks [later] in the US. However, both these vaccines--one that has already received emergency-use authorisation [Pfizer] and the other that might receive soon [Moderna]--have not partnered or done clinical trials in India. So, these two vaccines--Moderna and Pfizer BioNTech--are unlikely to be available in India for a few months, at least till February or March.

The one vaccine that is being seen as a hope for India is the Oxford-AstraZeneca vaccine, of which there are bridging studies in India. We can hope that it will receive emergency-use authorisation in the UK in the coming weeks. And since there are bridging studies in India, we can hope that either [by] late January or early February 2021, the Oxford-AstraZeneca vaccine might be available for use in India. Since there is an Indian manufacturer, we can [also] expect that there would be [a] reasonable quantity.

Will every country have to administer clinical trials before it allows the launch of a vaccine?

CL: One is the large-scale clinical trials done on 30,000 to 40,000 people, which are being done for different vaccines. However, if a country is not part of large-scale trials--[take] the Oxford-AstraZeneca vaccine for example. The trials are being done mainly in the UK, Brazil and the US. But within India, “bridging studies” on a smaller number of people are being done. And those bridging studies are required before our national regulatory authority can license those vaccines, even on emergency-use authorisation basis.

So considering those studies are not being done for Pfizer BioNTech and Moderna vaccines in India, the first requirement--even if these vaccines receive EUA in other countries--is that the bridging studies are done within the country to get a license.

[Editor’s note: Pfizer has since filed an application with the Drugs Controller General of India for emergency-use authorisation to import, sell and distribute its COVID-19 vaccine.]

Dr Shah, you've tried to look at this subject from a distribution, logistics and cost point of view. What do you feel are the key issues that will come into play in a few months’ time as the vaccine doses start rolling out?

AS: It's important to think that you and I are happy to pay money to get the vaccine. There are paying customers, there is demand, and there are private firms who are willing to sell the vaccine. So we should think about this market where there are private producers, and there are private buyers, and the two will try to find each other.

Now, when a vaccine goes through a large-scale clinical trial elsewhere in the world, there is merit in rapidly removing barriers to import and allowing it to happen in India. I would not see much gain by demanding large-scale trials or a great deal of scrutiny here, once something has worked elsewhere in the world. So I feel that the authorities should not come in the way of private initiatives to import boxes of vaccines and to roll them out.

Think of this market where there are multiple players--Pfizer, Moderna, Oxford-AstraZeneca, and there will be many others. The story is not going to end at three. So, there will be competition. There will be multiple vendors trying to sell vaccines, and there will be private people. You will be running shows where you will be helping customers choose this vaccine or that. Some vaccines will work better for older people, some for women, and so on. And that's a market where there are many products and people should choose. There are price points, like Rs 2,000, Rs 3,000 or Rs 4,000. And all over the country, there is a very large private sector in healthcare that is quite capable of rolling this out on a gigantic scale.

At the same time, while the producers are ramping up their output, the demand for the vaccine will be going away, because many of us will get vaccinated and herd immunity will set in and the threat of the disease will really go away. So it's a very interesting situation in India, unlike many other places in the world. In India, we've actually got large-scale seroprevalence already. So, relatively modest amounts of vaccination will tip the system over into herd immunity, and people will subjectively start understanding that [for example], “I'm in Pune, and nobody's getting sick anymore. So let's stop fighting with this”. And demand for the vaccine in Pune will evaporate. So this is the interesting dynamic that will take place, that there will be and there should be multiple private vendors offering vaccination. And at the same time, in a way pretty rapidly, vaccine demand is going to go away. So the prices are going to collapse.

Are you saying that the government should not at all be involved in distribution, or that it should be involved in distribution only up to a point?

AS: The government should pick a few important categories. In my mind, civil servants, public sector healthcare professionals, police personnel--this is really the job of the government, the employees of the government. I would like it if a lot of employers will take care of their own people. And the government should take care of civil servants. So the employees of hospitals, police personnel, the people who have any kind of frontline roles, that's the job of the government--that may be 10-20 million people all over the country. If the government can organise that, can manage that, that will be quite an achievement. In India, state capacity is low. So if we make large demands on the state, it will really not work out too well. We should ask for small things from the government and hope that competence will actually come about.

Dr Lahariya, how do you see it from a medical standpoint?

CL: We need to understand that we are in a pandemic where individual protection will also benefit the society. For example, if one individual is vaccinated, they will stop spreading the virus or will reduce the risk, and that will benefit the entire society.

So in this kind of situation, [a] vaccine is a public good. That means two things. One, if left to the market forces, or if people were to start buying and using it, the people who are the worst affected--the poorest, the marginalised who cannot afford--will be left behind, while they are at as much risk as anybody else. So I strongly believe that the government should take the responsibility and the front seat, and offer the vaccine on the basis of priority.

Of course, all of us want a number of players and multiple manufacturers. And I'm sure that there will be a number of manufacturers. But still, with the kind of advance market commitments and advance purchases done by multiple countries, the availability of a vaccine is going to be limited. This limited vaccine needs to be prioritised. The prioritisation is most essential, which most governments--including the government in India--are doing. And for the prioritisation and optimal utilisation of the limited vaccine, the government should take charge; otherwise, if left to the private sector or the individual, it will bring inequity and result in those who need vaccines being left behind.

The third issue is the cost. If left to market forces, the cost is going to be very high and unaffordable. But when the government is involved in the purchase, the cost of a vaccine is going to be low.

What should be the cost of the vaccine? It should be looked at from the people or citizen’s perspective and from the government’s perspective. In my opinion, the vaccine should be free of cost for a majority of the population, if not the entire population. Let's say 60-70%, or even up to 80% population should get it free of cost--because if they are protected, it will prevent the spread and then that's how the pandemic will disappear. So, the government should bear the cost for them.

How much should be the cost for the government? We know that some of the vaccines which are getting emergency-use authorisations are really expensive--$20 to $40 per dose, which is unaffordable for a country like India. We also know that there are mechanisms working out, so for the government, the cost would be $3 per dose. It is still very expensive. I foresee, in the future for example, if the collaborative vaccine between the Indian Council of Medical Research and Bharat Biotech is developed, around $1 or 50 cents per dose will be the real cost from the government perspective.

You're saying that the government should be in full control, [and] not even the blended approach that Dr Shah is suggesting. Let's say if I can afford to pay and import the Pfizer vaccine from the UK, I should not be allowed to. Is what you are saying?

CL: That discussion is already happening in India, that the government should be taking charge of this work and vaccinating the majority of the population. At the same time, there is a discourse that the economic activity should be continued [such as people returning to work]. We know that the economic activities are done by the healthier adults who are not in the priority list [for vaccination]. There would be some vaccines which are really expensive--like Moderna, Pfizer BioNTech vaccines. The government is unlikely to use those vaccines, but if those vaccines become available, and if there are private players who are willing to buy and use those vaccines, I guess that's the kind of mechanism that should be used. The government is already allowing or considering that the private sector or industry can purchase some vaccines, and they can use it. But immediately, [it is the] government who should be in charge or [in the] front seat for vaccination in the country.

Dr Shah, how do you see this? Will we be able to manage this balance with the government leading it, and should the government lead it? Have you worked out the numbers on what a $3-dose means, in terms of affordability, for the government as a whole?

AS: I'd like to come to this discussion with many, many elements of the logic. There are so many things that are different about the Indian context. To think about vaccines in India is profoundly different, say, when compared with how you might think in the UK. Problem one: We have seroprevalence in India amongst poor people, which is already very high. There was a recent survey in Mumbai where 75% of the slum dwellers already have antibodies. So in some sense, the story with poor people has already unfolded far more than we may have liked. There is a very large-scale expansion of the disease amongst poor people. So when we start saying that we want to protect poor people, we have to be cautious in understanding that maybe it's too late, that the epidemic has already swept through a lot of poor people in India. This is the first point that needs to be kept in mind, that seroprevalence in India is unprecedented by international standards.

Second, I'm a little uncomfortable with the word “public good”; it is a technical economics term. A vaccine is a private good with an externality. It is a private good because I spend money, I get vaccinated, and I benefit. It has an externality, which is [that] I stop transmitting the disease. So we should be careful about the use of these words. There is a case for government subsidy, to encourage me to get vaccinated, but it's not a public good.

The third point that we should think about is, what state power do you want to use? What state violence do you want to bring into the picture? Does the state ban the import of mobile phones into India? Do you want the Indian state to ban the import of vaccines into India? I doubt it. Will the Indian state really prevent you and me from importing a vaccine into India? That would be kind of extreme and we really should think 10 times before doing that. Will the Indian state ban private people from rolling out vaccines to private customers? That would be kind of extreme. We saw what happened, for example, with testing. The Indian state tried to interfere with private labs doing testing. And that just retarded India's development of the testing system. We just lost two-three months because the Indian state tried to tell private firms, “Thou shalt not test individuals, who are willing to pay money for a COVID-19 test”. [States such as Telangana, Delhi and Gujarat had restricted testing in private labs.] So these kinds of interventions are really suspect. And we should think a lot before using state power.

Let's imagine we're only trying to do good. Can the government go out and vaccinate some more people? I'm all for that--without interfering in the private behavior. That is key. Let the government try to vaccinate more people, but don't harm other people who are trying to do vaccination. I think “don't do any harm”--some kind of Hippocratic oath--should be a part of health policy thinking, above all. Let the government system do what it can, but don't harm other people who are trying to do immunisations. And state capacity in India is very low. If they can immunise their own civil servants, that will be pretty good. Beyond that, let's see what they feel like doing.

Dr Lahariya, seroprevalence studies in Mumbai, Delhi, and in the south show a large number of people are already carrying antibodies, and therefore, have likely contracted the disease and overcome it. In that sense, as an epidemiologist, how do you approach this? Do we really need that many vaccines? And even if we do, how do you distribute it in a way that the right people get it?

CL: It's good that we have brought up the issue of seroprevalence in this discussion. We know that across the country, there are around 30 different cities and states which have conducted seroprevalence studies. And what we know [is] that the seroprevalence in these studies has been found [to be] ranging from 5% to around 56% in Mumbai slums. But we also know that there were two nationwide studies conducted by Indian Council of Medical Research. The first one found a seroprevalence of 0.72% and then second one found seroprevalence of 7% across the country. So, we can definitely not say that all poor people have been infected. Mumbai was an outlier and there are reasons. I have written a paper on that, about why this is slightly higher in Mumbai settings. But we cannot say that poor people have been fully exposed. There is a wider agreement that globally, only 10% of people were affected by the end of October; 90% were still susceptible. If we go by ICMR’s study, the second national seroprevalence survey, only 7% were affected, and 93% were still susceptible. So there is a wider susceptibility.

The second point I want to bring up here is that the concept of herd immunity is not applicable in a setting of a smaller geographical area. It is applicable in a wider setting where there is limited in- or out-migration of people. For example, a person living in a setting--even [one that has] a 70% seroprevalence--the moment he walks out to work in other settings, he is exposed. He's not protected by that seroprevalence or herd immunity. So those are the challenges.

I want to go back to the point of public good and social contract. And I want to really emphasise that health is a social contract. Here, people have given some rights to the government; so, the government needs to act on their behalf. And in the pandemic, which is affecting everybody, people agree that the government has some right to work on their behalf and do some good. Also, any health intervention--this is a moral and scientific principle--should not result in increasing inequities. Anything that is a market-based principle, where people who can afford to buy a particular limited good, will result in inequities and will affect the poor the worst.

Are you saying that the seroprevalence data are not believable or that there are not enough surveys being done? If we look at the overall fatality ratio, we are doing much better than we thought. We were expecting a massive Diwali surge. That does not seem to have happened--at least in many parts of the country.

CL: Each of the data is believable, but those are applicable for smaller settings. We have seen seroprevalence of around 25% to 30% in Delhi, which is believable, and 56% in Mumbai slums, and then 46% in a second survey. But we have seen that Indore had a large number of cases being reported, but seroprevalence in that setting was only 7%. So what we know is that there have been smaller pockets which have a higher transmission, but there are other pockets which have less transmission. But as a whole, for the nation, the number of people who are still susceptible was around 90% in mid September. This number [of those who have antibodies] might have gone up to 15% or 20%, but nearly 80% would still be susceptible and would need to be protected.

The second point is that we don't know how long the protection after natural infection would last. We don't know what is the level of population that should be infected for herd immunity to develop. It has been discussed from the range of 43% to 70%. And if we know that over a period of 10 or 11 months, if the country has reached 15% to 20%, it is unlikely to reach that level [soon].

There are many unknowns. In those unknowns, the best intervention is that we don't simply rely too much on seroprevalence studies. We simply don't focus too much on herd immunity. And we use the interventions that we can. The vaccine is one such intervention coming to our rescue. We have also seen in past pandemics that the pandemics do not disappear without effective interventions, and the vaccines appear to be promising, especially when we are seeing that these vaccines are highly efficacious. So if something is efficacious, it should be prioritised. It should be used, made available to those people who need them most, irrespective of their buying or purchasing capacity. That's something only the government can do.

Dr Shah, we are basing a lot of these interpretations on available data, which is limited at this point. What is your sense on where we can go with our interpretations?

AS: There are many seroprevalence studies. We need to index them by date, because the speed at which the epidemic is going through society is quite remarkable. As an example, recently, there was a Mumbai slums paper which got a number of 75%. There is a good Karnataka paper, high-quality statistical random sample of Karnataka that was conducted from June 15 to August 29, where the overall average answer is 50%. And that's a survey conducted, if you take a weighted-average date, the average date on which the measurement was done was July 21. Every month that goes by after that, actually, the epidemic is spreading in the country. We're already standing in December. There is no reasonable possibility of a significant rollout before January or February. So by that time, the pandemic will have made significant progress. There are different numbers for different locations--that's entirely correct. And that, in fact, is the beauty of a market-based system. If in Mumbai, we are understanding that our neighbors are not getting sick, people around us are not getting sick, the threat perception changes, and then our demand for the vaccine goes down, whereas in a place where lots of people are getting sick, where the threat perception is high, there will be a greater clamor for the vaccine, and then there will be demand and then private persons will take vaccines there.

So I would just reiterate, the Hippocratic Oath of public policy should be that the government should not interfere with, for example, you importing 10,000 doses. The Government of India should not interfere with you giving out doses to your friends and family. If the government wants to run a programme, great, please do so. I have my own skepticism about what the Indian state is capable of.

[Editor’s note: The study conducted in 20 of Karnataka’s 30 districts is yet to be peer-reviewed. The samples were limited to villages within 30 km of the centroid of each town in the sample.]

Assuming the state plays a leading role in giving out vaccines to everyone, or most people, what is the kind of cost that we're looking at--because economically, we are not in the healthiest of shape either?

AS: There's going to be a rapid price collapse, because one by one, these factors will come into motion, and the demand is collapsing. So this is a very interesting market. There will be like an infinite price for the first dose. And there's going to be a rapid price collapse after that, because one by one, more and more vaccines are going to be approved and there will be a ramp up of manufacturing capacity and the demand will go away. So you're going to have a crazy imbalance between supply and demand. Every month, the prices of the vaccine are going to collapse.