The government announced a revised vaccination policy on June 7. Compared to the liberalised vaccination policy of April 19, there are welcome changes in it. However, a careful reading of the new policy also raises some important questions, the answers to which we are unable to deduce or find in the public domain. In what follows, we outline the changes and explain why we welcome them. We also list out our questions and hope that we find the answers via our readers.
The single most important change, and it is a welcome one, is that the Union government will now procure 75% of all vaccines produced by domestic manufacturers. As per the earlier policy, this was 50%, with the remainder being procured by the states and by private entities. In effect, the change is that states no longer have to worry about procurement. Unfortunately, the new policy document is silent on imported vaccines.
Vaccines procured by the Union government will now be allocated to the states on the basis of “population, disease burden and progress of vaccination.” The document also states that vaccine wastage will have a negative impact on allocation.
Any allocation formula for a country as large as India will inevitably leave some people dissatisfied. That, unfortunately, is inevitable. Our recommendation in this regard would be to prioritise those states that show the ability to administer doses as quickly as possible. Allocating doses to states that are not able to utilise them quickly will serve no purpose. Apart from this, our only hope is that the formula for allocation of vaccines is kept as simple as possible, and is announced publicly as quickly as possible.
Our biggest source of confusion with the new policy is the role of, and the incentivisation for, private hospitals. Our preference, as we have argued since April, is for private hospitals to have a role in the last-mile delivery of vaccine doses, but no role at all in procurement.
Unfortunately, the new policy leaves 25% of the vaccine procurement in the hands of private hospitals. We have fundamental objections to this, but in this essay, we focus on the operational issues that arise out of our interpretation of the new policy.
The new policy quite clearly states that state governments “will aggregate the demand of private hospitals keeping in view equitable distribution between large and small private hospitals and regional balance”. Based on this aggregation, the Union government will facilitate the supply of these vaccines to the private hospitals.
There are two important questions about this specific aspect of the new policy that remain unanswered. First, is the split between public and private procurement always going to be exactly 75%-25%, or is it a case of up to 25% private procurement? That is, if private procurement in a given month turns out to be less than 25%, will public procurement go beyond 75% for that month – or indeed the other way around? Second, while demand aggregation now happens from the ground up for private procurement, and that at the state level, the question of allocation remains unclear.
Whether this will follow the same allotment formula as for the other 75% has not been made clear. The payment for these vaccines will be via the National Health Authority’s electronic platform. The price of these vaccines would be declared by each vaccine manufacturer in advance. Finally, private hospitals can charge up to a maximum of Rs 150 per dose as service charges.
Causes of confusion
Consider this all-too-plausible scenario: a private hospital in, say, Mumbai has 2,000 doses that it has been allotted by the state government from its 75% quota. Should it bother procuring another 2,000 doses from the manufacturer from the 25% quota? It stands to earn, by the government’s own policy, not more than Rs 150 per dose. The price of the vaccine itself has been fixed and it is very likely that this has to be paid to the manufacturer in advance. In fact, the profit margin on the Rs 150 itself will also be even smaller, for this includes taxes and administrative expenses of the hospital.
Our point is that this leaves no incentive for the hospital to try and buy vaccines for itself. We do not mean to suggest that the incentives be increased. Quite the contrary, our recommendation would be for this 25% quota to be shut down altogether. Raising incentives will inevitably increase inequitable access, as we had predicted in April, and as became all too obvious in May and June.
A related point, and one that we are unable to resolve by reading the document. Will private hospitals not be allowed to distribute publicly procured vaccines altogether? That is, will the entire 75% that has been procured by the Union be only distributed to government-operated vaccination centres?
The question matters because it helps us understand how many different prices will be at play. If publicly procured vaccines are made available in private hospitals, then a consumer faces three different prices for the same product. The first price is zero at government run vaccination centres. The second price is Rs 150 at a private hospital, if publicly procured vaccines are to be made available at private hospitals. The third price will be a function of which vaccine is being administered. If, for example, the dose is of Covishield, then the price will be Rs 780.
This will include the price of the vaccine, in addition to the service charge of administering the jab. We don’t understand how a private hospital will be able to sell the same vaccine at two different prices.
Finally, as far as what has been mentioned in the new policy goes, the Lok Kalyan electronic vouchers which people from Economically Weaker Sections can redeem at private vaccination centres will achieve little else other than additional paperwork. Sponsored vaccinations at private centres could happen just as easily without this system.
This policy is indisputably better than the policy that was announced on the April 19. That’s the good news. The bad news is that the bar had been set very low in the first place. All that being said, one question remains, and it is a crucial one.
Our biggest and most important question pertaining to the new policy is about what has been left out of it. India has so far administered 230 million doses out of the approximately 2 billion that are going to be needed, if all Indians above 18 are to be vaccinated.
How are we going to procure the rest? From whom? And when?
These questions, unfortunately, remain unanswered in the new policy. Perhaps we will have answers to these questions in the affidavit that is due to be filed in the Supreme Court later this month.
Ashish Kulkarni teaches courses in economics and statistics at the Gokhale Institute of Politics and Economics, Pune, and blogs daily at econforeverybody.com
Murali Neelakantan is the principal lawyer at amicus. He was formerly global general counsel at Cipla and global general counsel and executive director at Glenmark.