Expanding vaccine supply

Some good moves but freer pricing needed

It is welcome news that the Union government has finally begun to consider what is required to scale up the availability and production of vaccines within the country. Broadening the vaccine supply chain should have been a priority from the start, and it is unfortunate that the government did not take an active interest in doing so — unlike those in most other countries with pharmaceutical industries like India. The government has now announced a series of grants, including Rs 65 crore to Bharat Biotech, the producers of the indigenously developed vaccine Covaxin, to increase the amount produced at its factory in Bengaluru. A state public sector unit in Maharashtra, Haffkine Biopharmaceutical, will be given a similar amount to create an appropriate facility for the production of Covaxin. Two other public sector undertakings will also be supported: The National Dairy Development Board’s Indian Immunologicals in Hyderabad, and the Department of Biotechnology’s Bharat Immunologicals and Biologicals Ltd in Bulandshahr.

The government has set an aggressive timeline for these production facilities. Yet experts believe that creating appropriate facilities for producing the “inactivated virus”-based Covaxin in particular — the production process for which requires handling large amounts of the actual coronavirus that causes Covid-19 — may not happen on the government’s claimed timelines. Why this decision therefore was taken halfway through the month of April, when it could and should have been taken the day after Covaxin received regulatory approval in December 2020, is mystifying. There is much else that the government must do to broaden the availability of vaccines. Serum Institute of India (SII) has made public its request for Rs 3,000 crore from the government in order to ramp up its own production capacity. SII has made a cogent argument as to why government policy has made this request urgent — in particular, the controlled price of the vaccine, the banning of private-sector sales, and the restrictions on exports.

Taken together, these have prevented SII from garnering revenue of the scale required to expand production. Given this request was made public over a week ago, it is again unclear why the government has not addressed it. SII’s owners should also consider whether they can reach out to elements of corporate India to increase vaccine capacity. Several voices in India Inc have urged the government to permit spending on vaccines to be treated as mandatory spending on corporate social responsibility — even if temporarily. If the government loosens that regulation, many corporations might step up and put money in vaccine capacity, given that everyone stands to gain from higher vaccine production. The government should also consider some of the suggestions made by former prime minister Manmohan Singh, such as giving more flexibility to states in vaccination and indicate how the supply will be distributed.

Finally, the government must immediately examine the question of pricing. Recent deregulation, such as the opening up of the Indian market to foreign-approved vaccines, would be rendered useless if all pricing continues to be controlled. It is clear that what is needed is to induce a supply response in the pharmaceutical industry through free-market pricing — all while the government continues to mop up what it requires of the legacy vaccines. Companies like Pfizer and others can hardly be expected to set up production lines in India if prices are maintained at below Rs 200 a shot. The government must demonstrate that it is now working in cooperation with the private sector.