Yahoo Finance Why ‘open for all’ vaccination policy could face severe challenges
The central government has announced that vaccination will be available to the population above 18 years of age from May 1. The Indian Medical Association and many leaders, analysts have been demanding the opening of vaccination for all to curb the rise in the number of COVID cases.
Currently, only citizens above 45 years of age, and healthcare and frontline workers are eligible for vaccination. The central government procures a quantity of vaccines from the manufacturers, Serum Institute (Covishield) and Bharat Biotech (Covaxin), and distributes it to states. For free.
The states then allocate the stock to government vaccination centres, which administer vaccines free of cost and to private hospitals that charge Rs 250 per dose (Rs 150 for the vaccine and Rs 100 as administration charge).
Free or not?
From May 1, the supply of vaccines manufactured will be divided into two buckets: 50% for the Centre and 50% for the open market. Through the open market channel, state governments and private hospitals will be able to procure doses directly from manufacturers.
Many state governments have announced that they will provide free vaccination to the 18-45 age band. Some have gone ahead and placed orders with the suppliers.
Meanwhile, a controversy has erupted over the high pricing for vaccines announced by the manufacturers. As per reports, the central government has requested Serum Institute and Bharat Biotech to reconsider their pricing structure.
While this move will boost the immunity of younger people who are more productive in the ecosystem, it doesn’t provide states enough time to secure supplies to ensure smooth operations from May 1.
Will there be enough vaccine available?
As per GoI’s press release, so far 14.2 crore vaccine doses have been provided for Indians. However, of these 2.2 crore have been the second dose resulting in a total of 12 crore citizens having received at least one dose.
On April 1, 2021 India had administered a total of 7 crore vaccines.
The population above the age of 45 is roughly 29 crore and together with 3 crore frontline workers this becomes 32 crore. They require 64 crore jabs, but by the month end only 16 crore are expected to be delivered.
In April, 80% of the incremental vaccines were the first dose to the people above 45 years of age. This segment of the population is also the most vulnerable due to their high mortality rate.
Amidst all this, vaccine production capacity of Serum Institute and Bharat Biotech is about 10 crore doses/month: this will slowly be ramped up from June 2021.
The recently approved vaccines from Russia, Johnson & Johnson and Pfizer are still some distance away from Indian shores.
We believe that unlike people above age 45, the participation of the 18 to 45 age group to get vaccinated will be very high. This is predominantly due to the fact that they are a large part of the working population and most importantly many of them are sole breadwinners in their family.
Why 'vaccination for all' should not have been done now
Allowing vaccination for all is a good move but allowing states, private hospitals and corporates to meet this demand is not advisable at this juncture given the national emergency situation.
The centralised approach of procurement, though a bit tardy, is better with benefits of bulk procurement, competitive pricing and visibility of supplies.
Now all the states would need to enter into contracts with the same domestic manufacturers as well as international suppliers. The states would jostle with each other, leading to competitive bidding resulting in a sellers market.
Some states could prefer the tendering route which will further delay the process.
The pricing announced for state governments by Serum Institute is Rs 400, while Bharat is Rs 600 — as against the current purchase price of Rs 150 for the central government.
Some of the state governments finances may not support this vaccination programme. Richer states can edge out the poorer states; similarly, bigger states could edge out the smaller states.
With just 25% of doses for above 45 years of age expected to be given by April 30 (16 divided by 64 crore), bulk of the next 3-4 month production (at enhanced capacity levels) of Serum and Bharat would be required to meet this group’s demand.
The Government of India has already secured supplies of 29 crore from the two producers which is likely to be delivered between May and July.
This leaves states with very little supplies available to vaccinate the age group of 18-45 from May 1 and they will depend mostly on imports. Serum has informed the Maharashtra government that it can supply Covishield vaccine only from May 27.
The Serum Institute of India has informed the Maharashtra government that it can supply Covishield vaccine only after May 20: Health Minister Rajesh Tope
— Press Trust of India (@PTI_News) April 27, 2021
This uncertainty of supplies could lead to shortages in the initial few months.
How would the government ensure that this would not lead to black marketing of vaccines, just like in the case of Remdesvir, Fabi Flu, et cetera?
The sheer numbers of vaccines required in India is mammoth at 180+ crore doses which requires a clear roadmap and demand-supply analysis.
We believe, opening up more segments of population for vaccination should have been done only post capacity expansion by the 2 Indian entities and/or after sizeable imports/stocks of other vaccines in order to avoid logistical nightmare and regulate demand.
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