Dude, Where Is My Vaccine?

While there are many critics of the government's vaccine strategy, over 75% of 18+ Indians could be vaccinated by October '21

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It is sad to see commentators write about things they are clueless about - which is much like YoYo Honey Singh trying to teach M.S. Subbulakshmi how to sing Venkateshwara Subrabatham. Vaccination is one such thing where people with kindergarten knowledge are preaching the treatise! Vaccinating a billion people is a tough challenge and India with its EVin (Electronic Vaccine Intelligence Network) has the basic infrastructure in place to do it, yet we are stumbling. Not because of the absence of good intent or good policy design by the Government of India (GoI), but due to politics and its sad consequences.

First, a monopsonist, or a sole buyer, can easily aggregate demand and drive down vaccine prices. Market power in product markets exists when firms have the ability to set prices they charge, within limits of the demand curve for their products. If 30 state governments are allowed to buy, then it will lead to interstate competition and drive prices up for everyone. So, the initial policy of GoI to centrally procure vaccines and allocate it to states was the correct policy response (did someone say government's don't follow "evidence-based policy" design?)

Second, the supply of vaccines in India is limited and we get about 60-70 million doses a month, even though Serum Institute of India (SII) claimed they would make about 100 million doses a month by early 2021. As such the supply curve of Covid vaccines is inelastic in the short to medium term. This is the nature of the beast and cannot be improved overnight. To quote one of my intellectual role models Warren Buffet "No matter how great the talent or efforts, some things just take time. You cant produce a baby in one month by getting nine women pregnant."

Third, the question asked by many prominent pharma cognoscenti is why did India not place firm vaccine orders in July 2020 and wait till January 2021 to do so? Should we place firm orders before even the Phase 3 trials are completed and results come out? Who pays for consequences if trials go wrong, and people die? Let us not forget that when a previous version of the Chinese SARS Virus happened, some well-meaning officers did just that - placed firm orders and gave advances, but the outbreak turned out to be less virulent than predicted and by the time the vaccines were ready, people did not take the vaccine. The money spent was wasted - with hindsight. Even after over a decade, the threat of adverse career consequences, if not possible criminal proceedings, hangs over their heads thanks to a CAG/ Public Accounts Committee (PAC) adverse comment on the waste of public money! Would any of our corporate pharma honchos be willing to take mega purchase decisions with the proverbial sword of Damocles hanging over their heads for the next 20 years of their career? So, in India's legal and administrative system, the orders could not have been placed before January 2021.

Fourth, why were vaccines exported under the Vaccine Maitri programme? Vaccines, unlike oxygen concentrators and Remdesivir, cannot be hoarded for consumption later. SII had produced some vaccines even before the emergency use authorisation. Thus, many Covid vaccines had an expiry date of around May 2021. Thanks to a deadly cocktail of ignorance of the masses at large and political propaganda that vaccines could lead to impotency and deaths (some prominent leaders dubbed it the "BJP vaccine" and refused to take it, while the rest of their families quietly took it), there was severe vaccine hesitancy. So, all through mid-January onwards, for several weeks, while vaccines were available for health workers and frontline workers, uptake was unsatisfactory. Thus, the government took the sensible step of exporting it to other countries, which earned it enormous diplomatic goodwill (which can be seen reciprocated with the outpouring of support from the world at large now, during India's second wave, which is a tsunami). It also prevented some vaccines from getting wasted and thrown away.

Fifth, the next step was opening it up to 45+ citizens to take the vaccine and then suddenly, even though things were going fairly well, we saw some Chief Ministers arguing they wished to vaccinate all their citizens and would pay for it also! Their followers and some media commentators accused GoI of brute centralisation in pricing control, supply control, and attendant "lack of democracy" in allocation of vaccines trying to attack the strongman image of Modi. The GoI reaction was to tell states it will now be a 50:50 formula as per their request! That they were welcome to negotiate directly with vaccine suppliers. In turn, suppliers fixed differential - higher - prices for states. Again, the same states and media commentators went into a hand-wringing mode saying they don't have the money to vaccinate their entire populations and GoI should do so centrally. But, this is what GoI was doing in the first place till it got accused of not caring enough for all citizens and being a "control freak" - so it is do you are damned and don't do you are still damned!

Lastly, let's come to the possibility of global tenders. Even assuming the bids come at a 60 per cent plus discount (Pfizer/Moderna cost around $35 per dose), can India afford it at $10-15 per dose for a family of four or five? The answer is a clear no. The issues of cold chains (-30 to -70 degrees) and indemnity come next. These are likely non-starters, and will get a feeble response for now in India.

India, with a per capita income of $2,099, cannot afford to stockpile 2-4x vaccines for its population like the US has done. And the European Union (much more prosperous than India) still suffers from acute vaccine shortages. Even today the pace of vaccination is low in Europe. Investec, in a research note, has analysed the vaccine ecosystem and argued that in another three months we will have a 2X-3X increase in supply through a combination of enhanced domestic production, imports and newer vaccines coming in (Sputnik, Novavax, Biological-E, Cadila, Covaxin Inhaler, and Johnson & Johnson single-shot probably at around $5 per dose) and by October 2021 India can vaccinate 75 per cent of its 18+ population. They also estimate that even at these prices the industry profit pool will be around $2 billion by January 2022. In sum, India will vaccinate and get the better of Covid.

Exactly a 100 years ago, the Spanish Flu pandemic devastated, and led to 40 million deaths, of which about 20 million were in India in just four months. Till date there is no vaccine for the Spanish Flu. But India has a vaccine for the Chinese virus and shall through unparalleled determination of its gritty people conquer the once in a century Covid challenge too. Indeed, we should now invest in our capabilities to design more vaccines completely end-to-end in India itself so that we can meet the challenges of future pandemics as and when they come. Let us not forget there are 8,000,000,000 people on earth versus 10, 000, 000, 000, 000, 000, 000, 000, 000, 000, 000 estimated viruses in the world! We will still win.

(The writer is an IAS officer. Views are personal)