Facing the world’s worst COVID crisis, India decides now is the time to raise vaccine prices

April 23, 2021, 11:53 AM UTC

Faced with a record-breaking second wave of COVID-19, India is scrambling to get more of its 1.4 billion people vaccinated. The administration of Prime Minister Narendra Modi is from May 1 opening vaccine eligibility to everyone age 18 and up. And it’s allowing India’s vaccine makers to charge more for vaccines, a move that’s intended to stoke vaccine production—but has provoked public outcry for effectively raising the price of vaccines when Indians need them most.  

Until now, the Serum Institute of India and Bharat Biotech, manufacturers of the two COVID-19 vaccines approved for distribution in India, have sold those vaccines directly to the government at INR 150 ($2) a dose. The government, in turn, supplied the vaccines to private hospitals and state governments. Under the new policy, vaccine producers are permitted to sell up to half of their output to private hospitals and state governments directly at a higher market rate. The aim is to create an incentive for manufacturers to boost production.

India’s drugmakers have struggled to boost supply ever since vaccine exports were temporarily halted in March, depriving manufacturers of a vital source of funding. The resulting vaccine shortage forced state governments to scale down their vaccination targets. 

After May 1, vaccines will remain free to Indians over 45 and health care and frontline workers who receive them at government centers. Indians between ages 18 and 45 will have to pay for their vaccines, although it’s not yet clear how much. (Indians have always had to pay for vaccines administered at private hospitals.)

After Modi’s government introduced the new pricing policy on Wednesday, the Serum Institute, the world’s largest vaccine manufacturer, announced that it will price its version of the AstraZeneca vaccine, called Covishield, at INR 400 ($5.30) per dose for state governments and INR 600 ($8) per dose for private hospitals. Adar Poonawalla, the Serum Institute’s CEO, said in a statement that the company will supply vaccines through government channels and private hospitals for now but plans to sell to pharmacy shops in four to five months.

Bharat Biotech, supplier of a COVID vaccine called Covaxin, is expected to announce its own pricing policy soon. In a recent statement about plans to increase output from 200 million to 700 million doses annually, the firm disclosed that it sells its vaccines overseas for INR 1,125 to INR 1,500 ($15 to $20) a dose.

Members of India’s opposition Congress Party immediately decried the new policy for prioritizing profit over public health as the nation is in the throes of a public health catastrophe.

On Friday, India recorded more than 330,000 new infections, the second consecutive world record for new daily cases in a wave of infections that shows no signs of slowing. Hospitals are overwhelmed. Health care professionals and families have taken to social media to beg for oxygen and other emergency supplies.

Congress Party leader Rahul Gandhi said liberalizing vaccine sales will force “the common man” to queue for jabs.

“They will face loss of wealth, health and risk their lives,” he said in a Twitter post. “All this will ultimately benefit only some industrialists.”

Other opposition leaders joined the criticism and demanded that vaccinations be free for all.

“In a situation like this, should one look for profits or help the afflicted?” Mamata Banerjee, chief minister of West Bengal state, said at a press conference. She is currently locked in an election battle with Modi’s Bharatiya Janata Party.

The new policy includes no price cap, but India’s health secretary, Rajesh Bhushan, said that a government panel will monitor prices of vaccines sold through private channels.

Under the new policy, the price of vaccines will vary, but considering the high cost of COVID inpatient admissions at hospitals, the cost should not be a deterrent, Dr. Prem Nair, medical director at Amrita Hospitals, Kochi, told Fortune.

Naushad Forbes, past president of the Confederation of Indian Industry, welcomed the policy incentives for vaccine manufacturers but added that they had come a bit late.

“My sense is that vaccine manufacture will at best help control the tail end of the second wave. It will help us control the length of the second wave,” he said.

“Honestly this policy of having a very low price, which we had so far, has been a problem. It sends wrong signals to vaccine manufacturers,” he said.

The policy change will also let private hospitals import directly from foreign vaccine makers. Last week, the Indian government said it would speed up emergency approvals of foreign-made COVID vaccines. Russia’s Sputnik V vaccine and Pfizer are among the contenders.

Forbes cheered that decision too. “We need all the vaccines we can get as quickly as we can,” he said, adding that many individuals will be able to afford INR 1,200 ($16) for two vaccine doses.

“My guess is that within three months’ time, you will see an abundance of vaccines being produced in India and you will see very high volumes and you will see a return of exports,” said Forbes.

That could bode well for the long term, but it doesn’t necessarily address the immediate need of protecting India’s adult population from the devastating outbreak.

Our mission to make business better is fueled by readers like you. To enjoy unlimited access to our journalism, subscribe today.