Home >Opinion >Views >A premium price cap on Covaxin is inexplicable

In the flurry of changes made this week to a vaccine policy marked by inconsistencies and flip-flops, India’s new price caps for privately-given covid jabs would qualify as jaw-droppers. Serum Institute of India’s facsimile of AstraZeneca’s vaccine, Covishield, can be priced no higher than 780 per dose and the Russian Sputnik-V is capped at 1,145, but Bharat Biotech’s indigenous Covaxin can sell for up to 1,410 per shot. What explains these differences? In itself, a private market with profit-seekers serving the relatively well-off is welcome. Under the rules, this market can corner no more than a quarter of our vax output, so diversion from our free-dose public effort need not be a worry if it’s policed well. And if fat margins made by vax-makers off premium payers fund their expansion plans and enhance supply, then a high-price market would’ve served its purpose. There is a caveat, though. While a typical market permits pricing that is demand-driven rather than cost-plus, this one features a virtual duopoly in the midst of a pandemic. This is enough to justify price ceilings. Yet, what glares out from all this is Covaxin’s cap. It muddles our vaccination programme’s implicit message of ‘a jab is a jab’, mystifies those who are weighing their options, and stirs dissonance among the discerning.

As Covaxin was developed partly with public money, thanks to Bharat Biotech’s partnership with the Indian Council of Medical Research, the need to recoup those expenses cannot justify too large an extra charge. Defenders of multiple caps, however, point to a difference in production costs. An adenovirus vaccine like Covishield can be made cheaply at scale, they say, while a formula like Covaxin’s that uses an inactivated virus soaks up greater resources, requires stricter control of quality and does not see its per-unit cost slide quite so sharply as output volumes rise. The claim that adenovirus jabs are cheaper to produce is broadly credible. Unfortunately, we do not have the actual cost per dose calculations of either, but it’s likely to be a small fraction of what private customers will be asked to pay. The pertinent point, however, is that price caps in this market should not be a function of production costs in the first place, for that would defy the whole rationale of India’s better-off paying sums they can easily afford in order to subsidize the rest.

Whether the caps will create variations in the perceptual value of varied vaccines is unclear. Covishield has World Health Organization (WHO) approval and can boast of efficacy data drawn from globally-accredited studies, with a recent clinical trial having shown a reduced impact on the virus’s Delta variant. By contrast, Covaxin is yet to get the WHO’s nod, and its third-phase clinical results even for the original strain remain under wraps (they will be put out in July, Bharat Biotech has said). An interim report had claimed a ratio of about five placebo-group infections for every infected fully-dosed Covaxin recipient; if the jabbed and unjabbed samples were equal, that would spell efficacy of some 80%. But these numbers were neither published nor peer reviewed. As for Delta, a small study suggested that Covaxin could trigger an immune response against it (though a weaker one than against other variants), but again, it was not conclusive. A recent comparison on that measure has shown Covaxin lagging Covishield, but this work has not yet been put under peer scrutiny either. We await clearer data. Meanwhile, let’s hope that our arbitrary pricing norms don’t warp market preferences.

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