From the national capital to all the major states, India is reeling under a shortage of oxygen, leading to a humanitarian medical crisis. Unnoticed, however, is the unfolding of a COVID-19 vaccine rollout disaster that creates inequity, shortages and a substantial economic burden on the States.
The Central government recently announced the Liberalised Pricing and Accelerated National COVID-19 Vaccination Strategy. Accordingly, 50 per cent of the production in India is reserved for the Central government; the balance 50% is for sale in the open market to the states and private hospital/entities.
To achieve herd immunity, vaccination of at least 70-85% of the population is necessary and needs to be completed in the next twelve months. The question is whether the strategy announced will achieve or hinder the objective.
Central procurement of vaccines a must
For the last 70 years, as part of the universal immunisation programme (UIP), the Indian vaccine procurement system has centrally funded and procured all vaccines from manufacturers (public and private) and distributed them through the states to all persons free of charge. The success of the UIP in reducing mortality and morbidity among infants and children is for all to see.
Moreover, the procurement of all vaccines by the Central government has the considerable advantage of a pooled bulk procurer using its negotiating power to lower prices from vaccine suppliers. Yet, for no apparent reason, the Central government abandoned the policy of procuring vaccines centrally. The advantage has thereby been frittered away by the Centre, compelling the state governments to negotiate for stocks with vaccine suppliers individually and compete with each other and the private sector.
From the buyer's market, which the central procurement results in, the Central government has made it into a sellers' market. The sellers - Serum Institute of India (SII) and Bharat Biotech (BB) - will move from reasonable profits to profiteering.
There is also no guarantee that the vaccines will be made available by SII and BB to the states in the required quantities. They can sell them to private entities from the balance of 50 per cent of the quota, which provides a higher price. Recently, in an interview with a TV channel, Finance Minister of Kerala TM Thomas Isaac highlighted that they have not been able to get any reply from the SII to their request to purchase the vaccines. Rajesh Tope, Health Minister of Maharashtra, has said that they won't get any vaccine supplies till the May 25.
Worse still, this would result in inequity. Well-resourced states may be able to procure vaccines, but the poorer states would be left and dry. Wealthier people would be able to vaccinate their families, while communities that live on the margins will go without much-needed vaccination. Some citizens of India will get the vaccines; others will not.
The decision of the Central government is contrary to its constitutional obligation. Entry 29 of the List III of the Seventh Schedule obliges the Central government to assist the states "to control interstate spread of infectious diseases". The Centre also has an obligation under international law and under Articles 14 and 21 of our Constitution to make essential health care goods, services and facilities "available and accessible" to all without discrimination. Thus, the Central government is duty-bound to procure the vaccines and provide them equally to the states, but its strategy will infringe constitutional obligations.
Price setting left to market forces
Procurement prices for the Centre have fallen from Rs. 200 to 150 per dose in recent months and expected to fall further. But the benefit may not reach the states and the people. In its submission to the Supreme Court, the government argues that prices should be set by "market forces." Prices of Rs. 300 per dose for Covishield of (SII) and Rs. 400 per dose for Covaxin of BB for state governments. The prices of Rs 600 and 1,200 per dose for private entities are far more than what is being paid abroad in developed countries. The SII vaccine is available in the European market at (USD 2.15) Rs 160 per dose, at (USD 2.10) Rs 210 per dose for GAVI, at (USD 3) Rs 222 in the UK and at (USD 4) Rs 297 in the US. The private companies have dictated prices higher for the states and in the private sector, which are marked up 200% to 800% higher than the price paid by the Central government. This will enable them to make excessive profits at the expense of people's lives.
The prices for the states at Rs 300 for Covishield and 400 for Covaxin have not been set by the companies alone and have received the Centre's backing. There is no justification for differential pricing for the same vaccine between the Centre and the states. The more serious consequence is that if the states have to pay double the Central government's price, precious resources of the states would unnecessarily be diverted from other health and social welfare programs. This is in violation of fundamental rights under Articles 14 and 21 of the Constitution.
SII has tried to defend its price structure stating that, "the initial rate, was based on advance funding, and now it has to invest in scaling up and expanding capacity to produce more shots.” The argument of SII is misleading.
SII is using the technology that Oxford University developed. Oxford University itself got huge grants from the government and public charities. A recent study in the UK concludes that "public funding accounted for 97.1-99.0% of the funding towards the R&D of the ChAdOx technology and its application for SARS-CoV-2." Less than 2% of the funding came from private industry.
SII got the technology and the know-how under an agreement with Astra Zeneca, which had licensed the vaccine from the University of Oxford with the aim that SII would produce one billion doses of vaccines for low-income countries at cost. It also received a grant from GAVI of USD 300 million (Rs 22,000 crores) to expand its manufacturing unit in India to cater for expansion and international needs. It has just received an unprecedented advance purchase agreement of 3000 crores to facilitate scale-up.
SII has received considerable support to produce the vaccine at cost. On Adar Poonawalla’s admission in an interview to NDTV at Rs. 150 per dose, SII makes a profit. Yet, the Central government agreed to much higher prices on behalf of the states and allowed excessive pricing in the private sector.
BB claims to have spent Rs. 300 crore on clinical trials. The vaccine itself has been developed collectively in collaboration with the Indian Council of Medical Research (ICMR) and the National Institute of Virology (NIV). The clinical trials funded by BB and facilitated at government institutes allowed the speeding up of the process. BB is now receiving Rs 1,500 crore as advance to deliver 90 million vaccine doses by July. The Central government has taken this extraordinary decision to provide funds for scaling up. Yet BB is charging Rs. 400 from the state governments.
Rather than allowing vaccine manufacturers to profiteer from the pandemic, the Central government should negotiate the prices with all vaccine producers at the same prices for the state and Central government and fix a reasonable trade margin (10-15 per cent) for the private sector. Further, the ceiling on cost of dispensation by hospitals should be fixed, failing which the courts should step in to direct the National Pharmaceutical Pricing Authority (NPPA) to fix prices under the Drug Prices (Control) Order.
The dire need to ramp up capacity for vaccine production
Vaccinations were taking place at 25 lakh a day in March 2021, peaked at 42 lakh per day in April but dropped to 18 lakh a day in the first week of May, despite the fact that supplies to other developing countries were banned. The Union Health Ministry needs to reach a minimum of over ninety crore people of the total of 135 crore to vaccinate 70% of the adult population and achieve herd immunity. As of date, just 15 crore doses have taken place, mainly just first doses. Not more that 2 percent have received the two doses. At this rate, it will take over two years to get to the target. Undoubtedly, we need to ramp up vaccinations and expand the production of current and new vaccines.
SII has the present capacity to produce at about 60 million doses a month, and it proposes to ramp it up to 100 million doses a month. BB has the capacity of 20 million doses a month but could not provide just over 8 crore in April. A decision to expand manufacturers is welcome. Production by Haffkine Biopharmaceutical Corporation, Indian Immunologicals and Bharat Immunologicalsis expected to be ramped up to 60 million doses a month.
The Russian Development and Investment Fund (RDIF) which is marketing the Sputnik vaccine is planning to produce 50 million doses a month.
The new one-shot version of Sputnik is also being launched in India. However, details of its production are not available.
Johnson and Johnson (J&J) is an important player as it has the one-shot vaccine and can be transported at temperatures between -2° to -8° centigrade. It also has the advantage in being able to vaccinate twice the number of persons. J&J has entered into a licensing agreement with Biological E. Though no bridging studies are required, the rollout is not likely to begin till September. Ultimately, the plan is to produce about 500 million doses annually of the single shot vaccine.
Novovax has also entered into an agreement with SII to produce its vaccine in India. The recent amendment to the contract allows SII to produce the vaccine materials.
All told that about 250 million doses may be available per month when all are on full steam. That is about 6.7 million a day. Even if these are all for the Indian market, it will take over a year to complete to achieve herd immunity.
Need to tackle patents, trade secrets, confidential information, technical knowhow
Some of these vaccines or vaccine platforms are patented. Unfortunately, the patent landscape on vaccines in India is not very clear. Firstly, applications for newer applications will not be made public for a period of 18 months. This can be remedied if India adopts, as Brazil has done, to direct the Controller of Patents to make public all applications for patents on COVID-19 related technologies immediately after 18 months of application. This will facilitate patent landscaping and decisions on licensing.
Secondly, in case of some the platform technologies, patent applications for the platform being used to deliver the attenuated vaccines were applied for earlier and are currently under patent. Thus, for SII's Covishield vaccine, licensed through Astra Zeneca, there are multiple applications filed for patents in India. Some of them have been granted patents. These need to be licensed out, voluntarily or compulsorily.
J&J, Pfizer-BioNTech, Moderna and Novovax innovations will be patented. Though Pfizer and Moderna use m-RNA technologies, which require cold chain conditions for them, at -80° C and make it difficult for them to be used on a large scale in India, they are technologies of the future. These need more producers in India.
Thirdly, RDIF's Sputnik is developed on an open-source platform and is being licensed to a large number of companies. Similarly, the government should openly license Covaxin technology to all willing producers.
For patent barriers, it is worthwhile to explore the issuing of government authorisation under Section 100 or compulsory licensing under Section 92 or contract manufacturing under Section 47. With the US government indicating its willingness for a TRIPS waiver for vaccines, that may be easier. But the waiver cannot be limited to simply waiving patent rights. The text of the waiver must include technology transfer, confidential information and trade secrets. The government, especially the Drugs Controller General of India's office, has to take measures to share the know-how openly to facilitate fast track production.
It is only if we return to the model of the national immunisation programme with procurement by the Central government and distribution by the states; vaccinate all people in India free of charge; and use powers under the Patents Act for issuing government authorisation, compulsory licensing or contract manufacturing in appropriate cases, that we can ensure that the vaccine rollout proceeds smoothly and doesn't turn out to be another disaster. The government must fulfil its obligation to safeguard the right to health and life without discrimination under Articles 14 and 21 of the Constitution.
Author is a Senior Advocate.
Disclaimer: The views expressed in this article are of the author's. Bar & Bench does not necessarily endorse these views.