Modi Forced to Change Tack But New Vaccine Policy Still Promotes Inequity and Inefficiency

Given the Supreme Court's scathing observations on his vaccination policy, the prime minister has rolled back the irrational burden he had placed on the states. But he is unwilling to stop vaccine manufacturers from earning super-profits.

With Prime Minister Modi’s speech to the nation on June 7, 2021, the disastrous, Tughlaqian shift in vaccine policy effected by his government on April 19, 2021 has been partially corrected.

Instead of procuring only 50% of Covid-19 vaccine doses and providing free vaccinations to everyone above the age of 45 years, the Centre says it will now directly procure 75% of the vaccines and provide vaccinations free to everyone above the age of 18 years. States have been freed of the unreasonable burden placed on them by the earlier policy of directly procuring supplies from private vaccine companies. However, 25% of all vaccine doses in the country will continue to be reserved for private hospitals where only the well-to-do will have access to them; vaccinations there are currently available at prices above Rs 1000 per dose.

The Centre’s shift to a “Liberalised Vaccination Policy” on April 19, 2021 took effect from May 1, 2021, and was criticised on multiple grounds.

First, that the new policy militated against the recognition of vaccines as a “global public good” – the free provision of which was a constitutional obligation of the Indian state. While every other country in the world was administering vaccines free of cost, India was one of the few countries that charged a price for vaccines.

Secondly, that Modi’s “Liberalised Vaccination Policy” opened the doors for “super profits” to be made by vaccine companies. The earlier policy had regulated vaccine prices at a level where the vaccine companies could earn only “normal profits”. The new policy was a response to the persistent demands from private companies to self-set vaccine prices at higher levels. At the new higher prices, vaccines became unaffordable for millions of Indians.

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Thirdly, that the “Liberalised Vaccination Policy” distorted the vaccine market by fragmenting it and promoting wasteful competition between the Centre, state governments and private hospitals. Consequently, the vaccine market was expected to become less efficient, less transparent and less equitable. The policy was also expected to burden state governments with huge and additional financial responsibilities.

The context behind the introduction of Modi’s “Liberalised Vaccination Policy” on April 19 was also significant: an acute shortage of vaccines in the country. The policy, then, had a clear political objective. Public anger resulting from vaccine shortages could be deflected by blaming state governments for their failure to procure vaccines. Towards this goal, the Centre even argued that the new policy was in response to demands from state governments for freedom to purchase vaccines directly. Of course, the truth  was that the states had been demanding autonomy in respect of vaccine distribution, and not vaccine procurement.

As the month of May progressed, the “Liberalised Vaccination Policy” quickly turned into a new political headache for the Centre. First, the efforts state governments made to directly purchase vaccines from the vaccine companies failed, as domestic producers communicated their inability to meet their demands, and international producers made it clear that they would deal only with the Central government. Several opposition-ruled States wrote letters to the prime minister asking him to ensure that India returned to the pre-May policy of centralised procurement. In short, there was considerable build-up of adverse public opinion against the new policy.

Secondly, the Supreme Court of India took up a suo moto writ petition in the matter of “Re: Distribution of Essential Supplies and Services During Pandemic”. In its intermittent orders, the bench, headed by Justice D.Y. Chandrachud,  admonished the Centre for the poor design of its “Liberalised Vaccination Policy”.

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In its most recent order, the Supreme Court called the policy “arbitrary and irrational” and asked the Centre to review it. The court also asked the Centre to submit a fresh affidavit outlining its plans to vaccinate Indians in two weeks. It was observed by many that the bench might even ask the Centre to withdraw the “Liberalised Vaccination Policy”.

Modi’s decision to partially correct his government’s vaccine policy with effect from June 21, 2021 is in response to these two developments. However, false prestige and lack of remorse was written all over the prime minister’s announcement.

Modi refused to acknowledge that his “Liberalised Vaccination Policy” had been a failure. Instead, disingenuously, he said the policy was being changed because state governments had failed to meet the challenge of direct procurement.

The reality is quite different: State governments had never asked to be tasked with the responsibility of buying vaccines. Many of them had even warned the Centre that they would not be able to fulfil such a responsibility. The Centre did not listen and thrust its policy on the states against their will. For Modi to now turn back and argue that states failed in their duties is nothing but hypocritical and duplicitous.

The problems which remain

It is also important to note that the change in vaccine policy is only partial. The new policy fails to address many fundamental problems with the “Liberalised Vaccine Policy”.

First, 25% of the vaccines will continue to be reserved for private hospitals. Essentially, this is  reservation for the rich, and hence it is perverse in design. Vaccines are being sold by private hospitals at excessively high prices of up to Rs 1800 per dose. Such predatory pricing keeps vaccines out of reach for a large majority of the Indian population. Further, reports show that 50% of the vaccines sold to private hospitals in May 2021 were cornered by just nine private corporate hospitals. The remaining 50% was sold to just about 300 private hospitals in the entire country. Such inequity is totally at odds with the recognition of vaccines as a public good, and the free provision of vaccines as a constitutional obligation of the Central government.

Secondly, this 25% quota for private hospitals is left untouched to allow vaccine companies to continue to make super profits, even if over a smaller volume of sales. Here, the Modi government appears to have succumbed, yet again, to the pressures from vaccine companies. To allow the extraction of profits in the range of 2000 to 4000 % amid the pandemic is not just iniquitous but downright vulgar.

Unless the Centre takes over 100% of the procurement and makes vaccine doses freely available to all, India’s vaccine policy would continue to promote inefficiency, opaqueness, and lop-sidedness. One hopes that the Supreme Court will direct the Centre to do so in its next hearing. A little tweak will not help; what we need is an overhaul.

R. Ramakumar is Professor at the Tata Institute of Social Sciences, Mumbai