There appears to be a change in the Covishield vaccine maker’s position with regard to its pricing
On April 24, Adar Poonawalla, CEO of Serum Institute, issued a statement to address the “ongoing public scepticism and confusion towards the pricing of Covishield”. The statement tried to address the controversy over whether the price of the vaccine at ₹600 (nearly $8) per dose for private hospitals was more than its cost when it was exported. But it did not refer to the issue of whether the vaccine would be priced differently for procurement by the Centre and the State governments.
Only a few hours before the statement, Union Health Minister Dr. Harsh Vardhan tweeted saying that the Central government’s procurement price for both COVID-19 vaccines — Covishield and Covaxin — remains at ₹150 per dose; the Health Ministry, too, tweeted a similar clarification.
These tweets contradicted what Mr. Poonawalla had claimed in an interview to CNBC-TV18 on April 21, that the price of ₹150 per dose was not applicable for any future procurement by the Central government, and that the vaccine would be sold at ₹400 both to the Central and State governments.
He said: “It is not a different price [for State and Central government supplies]. All government prices will henceforth be ₹400 for new contract. The ₹150 per dose for the Central government was for prior commitment and contracts. It ceases to exist after we supply 100 million doses to them. We will also charge ₹400 to any government, let me clarify that.”
These remarks had come in after the SII’s statement of April 21 announcing the price of the vaccine for State governments (at ₹400 per dose) and private hospitals (₹600 per dose) but which did not mention the price at which the vaccine would be sold to the Centre. Soon after the April 21 release was issued, the differential pricing for Central and State governments was highlighted by the media, Opposition parties and others.
The April 24 statement, by remaining silent on the Health Minister’s clarification, has kept the question over “differential pricing” alive.
As regards the higher pricing for private hospitals, the statement said, “The initial prices were kept very low globally as it was based on advance funding given by those countries for at-risk vaccine manufacturing.”
However, while SII charged South Africa $5.25 per dose, AstraZeneca was supplying to European countries at $2.18 per dose. The price the European countries were charged was accidentally shared on Twitter by Belgian politician Eva De Bleeker. On November 23, 2020, Pascal Soriot, CEO of AstraZeneca said in a release that “…our no-profit pledge and commitment to broad, equitable and timely access means it will be affordable and globally available, supplying hundreds of millions of doses on approval”.
Compared to early 2020, there appears to be a change in position with regard to the pricing of the vaccine. On April 22, 2020, before AstraZeneca came into the picture, Mr. Poonawalla told India Today TV that “this is not the time to make money from a vaccine against the novel coronavirus, which has caused a global pandemic”.
In the April 24 statement, Mr. Poonawalla also made the point that vaccines used in the universal immunisation programme were sold at a far lower price as the volumes were large. He cited the example of pneumococcal vaccines that are sold at a higher price in the private market, while the government is charged only one-third the cost.
Nearly 595 million people in the 18-44 age group are now eligible for a vaccine, which together with more than 300 million above 45 years, makes COVID-19 vaccination the largest immunisation exercise ever undertaken in India.
Mr. Poonawalla brought in the issue of the investment needed to scale-up manufacturing capacity to fight the pandemic to justify the higher costs. But what he left unsaid was that based on his demand for ₹3,000 crore to meet the cost of ramping up production capacity, the government had already agreed to advance that amount to SII, and ₹1,500 crore to Bharat Biotech. In a tweet on April 20, Mr. Poonawalla had also acknowledged and thanked Prime Minister Narendra Modi for the “swift financial aid which will help vaccine production and distribution in India”.
The Indian exception
While Mr. Poonawalla says that “only a limited portion of Serum’s volume will be sold to private hospitals at ₹600 per dose”, India is the only country that is selling the vaccine to private players.
With the Central government procuring 50% of the vaccines and supplying it to State governments for free for use in people above 45 years and when vaccinated in government facilities, States will be competing with private hospitals and with one another to procure the remaining 50% vaccines. This will completely change the way vaccines are distributed in the country.