Opinion

The vaccine pricing conundrum

G Naga Sridhar Hyderabad | Updated on April 26, 2021

States likely to prefer Covishield while the pricier Covaxin can be the choice for private distribution

The pricing of Covaxin, the first indigenous Covid-19 vaccine, appears to be a balancing act by Bharat Biotech, between the inoculation needs of the country and the company’s financial viability to support future innovation.

The Hyderabad-based vaccine maker had late on Saturday announced the price for its vaccine at ₹600 per dose for State governments and ₹1,200 for private hospitals. Its pricing for the Centre, though, is retained at ₹150.

Days earlier, Serum Institute of India had announced its price on the only other vaccine available in the country. Covishield was pegged at ₹400 per dose for the States and ₹600 for private hospitals. Serum’s pricing had raised a political storm.

The price declaration by the vaccine makers follows a directive from the Centre, freeing them to sell 50 per cent of their doses to the States and private hospitals from May 1, 2021 at pre-set prices.

Bharat Biotech appears to be projecting Covaxin as a premier shot, by pricing its vaccine higher than that of Covishiled. It is now the costliest vaccine for private players at ₹1,200 per dose.

The higher pricing for States and private hospitals could be to make up for selling at ₹150 to the Centre, by cashing in on the perception of it being safer vaccine with fewer side-effects.

Dynamics to change

The difference in the pricing of the two vaccines could lead to shifts in the demand pattern from the States. Cash-starved States could prefer Covishield with Covaxin looking to the private market.

But a rising demand for Covishield can cause bottlenecks in its supplies.

But the dynamics of the vaccination programme are set to change with more anidotes coming in. The Russian vaccine Sputnik V is to enter the market in May, even as the government is said to be negotiating with other foreign vaccine-makers. But, for now, Covishield and Covaxin are the key to the country’s public vaccination drive.

Cost or profit?

The higher pricing of Covaxin is bound to trigger criticism of profiteering. However, the investment in developing a vaccine cannot be denied and it needs to be recovered to support future research. Bharat Biotech is understood to have spent about ₹350 crore on clinical trials alone. Recently, the Centre announced a ₹1,500-crore funding for the company.

Serum Institute, too, had pointed to the “dire” situation with the virus rapidly mutating, putting more people at risk. “We have to ensure sustainability as we must be able to invest in scaling up and expanding our capacity to fight the pandemic and save lives,” Serum chief had said.

Even as pricing remains a vexatious issue, the hope is that vaccine makers will balance their needs with the public health requirement of a country 29 per cent of wjose population lives below the poverty line.

Published on April 25, 2021

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