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On Saturday, Adar Poonawalla, CEO of the Pune-based Serum Institute of India, issued a statement to address the “ongoing public scepticism and confusion towards the pricing of Covishield”. The statement came a few hours after Union Health Minister Dr. Harsh Vardhan tweeted saying that the Central government procurement price for both COVID-19 vaccines — Covishield and Covaxin — remains at ₹150 per dose. The Health Ministry, too, tweeted a similar clarification. The tweets from the Health Minister and Health Ministry put to rest the needless confusion over the pricing of vaccines supplied to the Central government.
In an interview to CNBC-TV18, Mr. Poonawalla claimed that the price of ₹150 per dose was not applicable for any future procurement by the Central government, and said that the vaccine would be sold at ₹400 per dose to both to the Central and State government.
He said: “It is not a different price [for State and Central government supplies]. All government prices will henceforth be ₹400 for new contracts. 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.”
The company’s statement of April 21 announcing the price of the vaccine for State governments and private hospitals did not mention the price at which the vaccine would be sold to the Central government. 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 statement tries to put to rest the controversy that at ₹600 (nearly $8) per dose, the company is charging private hospitals in India more than the price at which it exports Covishield. “The initial prices were kept very low globally as it was based on advance funding given by those countries for at-risk vaccine manufacturing,” the statement said.
However, while SII charged South Africa $5.25 per dose, AstraZeneca was supplying to European countries at $2.18 per dose. The price charged to European countries was accidentally shared on Twitter by Belgium 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”.
There appears to have been a change in position with regard to 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 makes a point that vaccines used in the universal immunisation programme are sold at a far lower price as the volumes are large. He cites 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. But that does not explain why SII should charge the State governments ₹400 per dose while charging the Central government only ₹150 when the COVID-19 vaccination programme is akin to the universal immunisation programme in its volume, scope and coverage. Nearly 595 million people in the 18-44 years age group are now eligible for a vaccine, which together with more than 300 million people above 45 years, makes COVID-19 vaccination the largest immunisation exercise ever undertaken in India. Private players will cater to a tiny fraction of the total number.
The differential pricing for Central and State governments is the sticking point, which is not explained by comparing the higher price that private hospitals are charged, or when the vaccine is made available in the retail market at a future date.
Mr. Poonawalla then brings in the investment needed to scale up manufacturing capacity to fight the pandemic to justify the higher cost that State governments are charged. But what he left unsaid is 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 also acknowledged and thanked Prime Minister Narendra Modi for the “swift financial aid which will help vaccine production and distribution in India”.
While he 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. But the point of contention is not the higher amount that private hospitals are charged but the higher price that the State governments have to pay while the Central government is charged only ₹150 per dose.
Finally, with the Central government procuring 50% of the vaccines and supplying it to State governments for free for use in people above 45 years when vaccinated in government facilities, the 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.
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