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Coronavirus | Vaccines bought first using PM CARES funds cost Centre more

As demand for vaccination increases, many States have said that they are facing a shortage of doses.   | Photo Credit: VIJAY SONEJI

The first lot of vaccines were procured by the Centre using PM CARES funds at a higher rate than the subsequent rounds paid for by budgetary allocations, The Hindu has learnt from the response to a Right to Information request by a transparency activist.

The Health Ministry response said that the initial 5.6 crore doses of Covishield were bought at a pre-tax price of ₹200 and one crore dose of Covaxin at ₹295, but Finance Secretary T.V. Somanathan said both vaccines were, in fact, bought at around ₹200 only.

This is higher than the current ₹150 rate at which both vaccines are now sold to the Centre. Dr. Somanathan told The Hindu that bulk orders, advance payments and a lower demand situation had helped in negotiating for the lower rate, “which may not be replicable” for future orders by States or others.

From January 16 to May 7, India has administered a little over 16.5 crore vaccine doses.

At a time of surging demand due to the second wave of COVID-19 infection, vaccine manufacturers have now slapped price tags ranging from ₹300 to ₹1,200 per dose for their sales to State governments and private players.

The difference in cost in the vaccines paid for by budgetary allocations and by PM CARES, which the Centre says is a non-governmental fund, came to light in the Health Ministry’s May 2 response to an RTI query filed by Commodore Lokesh Batra (Retd). It said that initially the Government of India through PM CARES funds procured 5.6 crore doses of Covishield from Serum Institute of India at the unit cost of ₹200 (plus 5% GST of ₹10) and one crore doses of Covaxin from Bharat Biotech at ₹295 (plus tax of ₹14.75). This round of vaccines was initially aimed at frontline and healthcare workers, but offtake was relatively poor.

“However, at present, Government of India through Union Budget has procured the COVID-19 vaccines (COVISHILED 10 crores doses and COVAXIN 2 crores doses) at the unit cost of Rs. 157.50/- including taxes (Rs. 150 + 5% GST),” said the RTI response, adding that an additional 11 crore doses of Covishield and 5.5 crore doses of Covaxin were also being procured at the ₹150 rate, in what it described as an “ongoing process”.

Dr. Somanathan said that although the list price of the indigenously developed Covaxin was ₹295, the Centre had insisted that Bharat Biotech offer a discount to match the level of the foreign-developed, Indian manufactured Covishield. Hence, both vaccines were bought at a price of approximately ₹200 per unit in the first round paid for by PM CARES funds, he said

Asked for clarification, a Bharat Biotech spokesperson only pointed to Health Secretary Rajesh Bhushan’s statement on January 12 that the company sold 38.5 lakh doses to the Centre at ₹295 per unit and gave 16.5 lakh doses for free as a special gesture, bringing the per unit price for a 55 lakh dose order to ₹206.

Adar Poonawala, CEO, Serum Institute of India, didn't respond to a text message for comment on the differences in price.

The second round of vaccines purchased through the Health Ministry budget came at the lower cost of ₹150 because it was a bulk order with a significant advance payment, said the Finance Secretary.

“The second round, which was entirely from the government, had two elements. One, it was a much larger order. It is common in all kinds of manufacturing, including in vaccines and drugs, that larger orders get smaller prices, because there is a commitment to a larger quantity, and we are saying we’ll take this much at one go. And there was always a contemplation of and eventually, giving of an advance,” he said. In contrast, payment was only made after supplies were delivered in the case of the initial PM CARES order.

“It was a negotiated bulk price. I take pride in the fact that government tries to negotiate hard on behalf of the tax payer,” he said. “These are important commercial elements. They may not be replicable in other orders placed by others, whether State governments, or whatever we do later, depending on size, terms and circumstances. That’s where it is not an exact replicability,” he added.

Dr. Somanathan noted that “the situation has evolved” since then. From a time of vaccine hesitancy, India has moved to a high demand situation. “Demand was the biggest constraint until three weeks ago, now it is supply which is the biggest constraint,” he pointed out.

A criticism of the government has been that it didn't procure enough doses in the beginning of the year to sufficiently inoculate enough Indians to possibly blunt the impact of the ongoing second wave. Over the past month, several States have complained about the differential price of vaccines and many experts have pointed out to India being an exception among major vaccine-administering companies in not inoculating all its citizens for free.

The PM CARES fund has also come under criticism for a lack of transparency, as the Centre insists it is not a governmental fund, and thus not subject to RTI.

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Printable version | Jun 21, 2021 1:48:42 AM |

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