Policy

New vaccine policy may give room for price negotiations

G Naga Sridhar Hyderabad | Updated on June 08, 2021

 

The revised vaccine policy of the Centre is likely to open up a fresh round of negotiations on the price of vaccines.

Prime Minister Narendra Modi had, on Monday, announced a revised procurement plan for vaccines, where the Centre will buy 75 per cent of the vaccine doses produced in the country and supply it to the States.

 

Vaccine makers are free to sell the remaining 25 per cent of production to private hospitals at a service charge of ₹150. In fact, on Tuesday, the government further outlined its procurement details.

This will mean a change in the current regime of vaccine pricing and supply and the possibility of negotiations between vaccine makers and government for an upward revision of prices.

As per the previous policy, the Centre was to buy only 50 per cent of the production at ₹150 per dose. Both Serum Institute and Bharat Biotech had priced Covaxin and Covishield at ₹300 and ₹400, respectively, for the States.

Revenue loss

With an additional 25 per cent going to the Centre at ₹150 per dose and no prospect of sales to States at a higher price, vaccine makers will now lose revenue to an extent. A senior functionary with a vaccine maker told BusinessLine that the Centre’s price of ₹150 per dose was only possible because of sale of doses at a higher price for States and private players.

“It may not be viable to supply 75 per cent of production to the Centre at current prices, which calls for a relook at the price,” he said on condition of anonymity.

Orders placed

The States that have already placed orders for Covid vaccines will now take a relook.

“While one is committed to pay for the doses, which we had already received, the doses that are yet to be delivered will have to be put on hold as the Centre will now supply to us,” said a senior AP government official.

A mechanism of the Centre taking over existing orders of the States is also being examined, it is learnt.

It is likely that the price of vaccines being supplied to private hospitals will also be revised by vaccine makers, taking into account price- supply dynamics of the new policy.

As of now, Covishield is being supplied to hospitals at ₹600 per dose, while Covaxin and Sputnik are priced at ₹1,200 and ₹995 per dose, respectively. This is exclusive of the service charge being levied by the hospitals.

Published on June 08, 2021

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