Should Restrictions on COVID-19 Vaccine Exports Be Relaxed?

It is possible for India to earn earn better goodwill than the earlier Vaccine Maitri programme by doing everything we can to drastically boost vaccine production.

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After receiving the Lokmanya Tilak National Award 2021, the chairman of the Serum Institute of India (SII) poured out some sad truths. While terming the ban on COVID-19 vaccine exports as a “very bad move”, he asserted that this has put his company in a difficult situation.

He elaborated by saying that over 150 countries are dependent on the SII for vaccines and they have paid “crores” in advance to the company.

Although SII had offered to return the money to the Gates Foundation and the WHO, the elder Poonawalla hinted that they declined the offer in the hope that the authorities will lift the ban on exports soon.

Is there a ban on export of COVID-19 vaccines at all? There has been no formal order in public domain banning exports of vaccines.

“We have not imposed any export ban on COVID-19 vaccines,” stated Arindam Bagchi, the spokesperson of MEA, on April 2, during a media interaction.

An IMF Discussion Paper authored by Gita Gopinath and Ruchir Agarwal published in May 2021 states:

“In addition, India has delayed most of its vaccine exports to prioritize vaccinations at home. Such delays disproportionately impact developing countries—for instance, the Serum Institute is contracted to supply about 85 percent of the supplies to the COVAX AMC facility, and persistent shortage of raw materials and export restrictions can reduce access to vaccines for 4 billion people in 91 developing countries plus India relying on this facility.”

While a proof of ban may be difficult to obtain, in a tweet dated February 21, 2021, by Adar Poonawalla, the CEO of SII informed:

The website of the Ministry of External Affairs reveals that last made-in-India COVID-19 vaccines under Vaccine Maitri, Commercial and Covax facility had left Indian shores on April 22, March 29 and April 16, respectively.

In recent remarks made to the media, Chairman of the National Technical Advisory Group on Immunisation, N.K. Arora indicated that exports may resume in 2022.

The affidavit

In an affidavit filed before the Supreme Court of India on June 26, 2021, in response to the suo motu writ petition (civil) number 3 of 2021, the Union of India admits that the “nature of the virus was and continues to be novel” and asserts that “unlike earlier vaccination drives, which did not have any time limit constraints, this time maximum reach in shortest time is the goal.”

Interestingly, the affidavit states that “55% of the population of the country seeks and gets medical care/health services from private hospitals and 45% gets health care services from government hospitals.”

Also read: As Govt Vastly Downscales Availability, India’s Vaccine Prospects Continue to Look Bleak

As per the document, “the total population of the country aged 18 years and above is approximately 93-94 crore. As such administering two doses to these beneficiaries would require an estimated 186 to 188 crore vaccine doses.”

Thus, after accounting for 51.6 crore vaccines received up to July 31, the government will approximately require 135 crore vaccine doses for complete vaccination to the eligible population.

The affidavit further projects availability of COVID-19 vaccines from August to December 2021 as follows:

Covishield 50 crore
Covaxin 40 crore
Bio E. (Corbevax) 30 crore
Zydus Cadila (ZyCov) 5 crore
Sputnik V 10 crore

Why 135 crore is not enough

With more than 3.2 crore COVID-19 cases, India is the second worst affected country in the world after the United States, which has more than 3.5 crore infections. While the government aims to vaccinate all Indians by the year-end, is this enough to keep Indians protected given the mutating nature of the virus and waning effect of vaccines on the inoculated?

According to the Indian SARS-Cov-2 Genomics Consortium (INSACOG), the continuing coronavirus outbreaks across the country are attributable to the Delta variant, a susceptible population, and reduced vaccine effectiveness in blocking transmission.

The Delta variant is currently driving COVID-19 across several nations with China and South Korea seeing new highs. Says Dr. Randeep Guleria, Director of AIIMS, “Information is still emerging…..it will take some more months. Possibly by beginning of next year, we will have data on what will be the type of booster shots and who needs it.”

With growing international opinion in favour of a booster shot – the third dose – especially for people with compromised immunity, our assessment of 135 crore vaccine dose may not be a rocket for escape from the pandemic. Moreover, uncertainties in outcome of clinical trial currently under process by Biological Evans and Zydus Cadila can spike the projected availability of vaccines by the end of current year.

We must remember the fact that the vaccines currently in use are not fully approved, having obtained only emergency use authorisation (EUA). Even here, according to a New York Times report, the Pfizer-BioNTech vaccine which has bagged full authorisation, is planning to quickly ask the FDA to approve a third dose as a booster shot.

All these evolving developments indicate that we may continue to require COVID-19 vaccines even after ensuring two doses to all eligible population, making it a multi-year affair.

Duopoly and monopsony

In India’s current duopolistic market, the government is the only buyer – the order for 25% of vaccines meant for private hospitals is aggregated, allocated and payment received through National Health Authority’s electronic platform – with some intermittent tweaks, making it an effective monopsony.

The question that obviously arises is, will an undeclared ban on export of COVID-19 vaccines result in higher production and availability of vaccines or will it push manufacturers to foreign locations with a view to honouring their contractual obligations and win back their goodwill?

People wait to receive a dose of COVISHIELD COVID-19 vaccine in New Delhi, May 4, 2021. Photo: REUTERS/Adnan Abidi

Whereas the sovereign has a right to impose reasonable restrictions, these measures should not be short sighted. The sovereign cannot be seen to be infallible. If fresh investment to scale up vaccine production is mired in uncertainty of output offtake and physical controls, it would push away investments and drive away entrepreneurship to foreign shores, deteriorating employment further.

The June 26 affidavit referred to earlier rightly observes:

“…Manufacturers would not have any incentive to augment their manufacturing potential and manufacture more vaccine doses, unless they have an incentive of selling some defined portion of their manufactured vaccines at the rates decided by them, so that they can sell vaccines to the Central Government after cross subsidization.”

Wanting more

So far, the government has treated SII and Bharat Biotech like kirana stores, placing order for vaccines just a few days prior to the date of delivery. India’s initial order sheet in January was parsimonious – just 1.1 crore shots at first. Even the bulk order for 66 crore doses of Covishield and Covaxin in mid-July appears to be an exercise in stringency.

There is a need to place bulk pre-order for vaccines, similar to Biological Evans’ deal, bind the producers in contract and make them free to produce as much as they can and export the excess production to the rest of the world, including meeting the obligations to WHO, GAVI and feeding the Covax facility.

The country can thus earn better goodwill than the earlier Vaccine Maitri programme. We have set up hundreds of export processing zones (EPZ) and are at present operationalising a Gujarat International Finance Tec-City, providing offshore banking, asset management and insurance services.

We can well set up a processing zone for manufacturing vaccines exclusively for export. And that is the only way for India to remain a leader in vaccine production.

Ganga Rath is a former Chief General Manager, RBI. Views are personal.