Pricing Vaccines in India: Calculating for Center and States

Way Out in Second Wave
Vaccination only seems to be the effective way out in all these complex developments. Healthcare infra is relatively less effective and is stretched to cope up with the massive daily news flows and curative measures.

The Giant Program in Vaccination
Approx. 12 Crore of the first dose and 2 Crore of the Second dose is completed. It amounts to 1.5% of total vaccination and hence, the pace with which India is moving in vaccination is low. Add to this upcoming opening up of doses for all adults. These all events are watchful on how exactly this machinery will be able to handle the program until July 2021 and beyond.

For a ‘state’ to vaccinate between 18-45, the cost may not be that high. The total cost for adults in India will be Rs. 58,282 Cr. Center said to take charge for those above 45 who wish to get it free. Cost to states (18-45) will be Rs. 48,048. Is it a challenge? No, how will they implement and execute that remains a key challenge.

Total Adults in India 81 Crore. Hence, 162 Crore of doses needed. Let’s imagine 10% of the population is Okay paying from privates. Adding to this 10% will have vaccine hesitancy and lower awareness. After adjusting for this base case, the total dose requirement is 129 Crore.

What’s happening
The Center wants to keep vaccinating those above 45 years and healthcare/primary workers. Hence 50% of domestic vaccine purchase to be done by the center. Center has contracted to buy 21 Crore doses. They need another 26 Crore doses. If now the states focus on 18-45 and if the unit cost is Rs. 600 then the total cost is Rs. 48,048 crore.

The Question
Why Center doesn’t want to bear the cost? Minister Sitaraman on multiple occasions has spoken on supporting finances for this health fight. Asking states to pay more for this is not ideal. They will be additionally hit by this. Infectious disease prevention from one state to another is in a concurrent list in the constitution. Clearly, it is not the state’s job alone.

Rs 48,048 Math
States like UP, Maharashtra, Bengal can easily allow the ratio of this spend relative to their state. Their current balance sheet won’t be stretched.

Expectation of Vaccine
15 Crore doses likely to be available from July 2021 including the Sputnik. 109 Cr doses will be available from May to December 2021. Hence if things are planned well, the entire vaccination can be finished.

Big Problem
It’s really not the cost or lack of doses. It will simply be how Center State relations work in the implementation of this giant vaccination program.

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Image: Contract Pharma

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