With an established pharmaceutical industry and a strong network of manufacturing units, one should ask if this vaccine shortage in India is because of the absence of production capacity or is it because of misdirected policies
As India battles the new upsurge in COVID-19 infections, concerns loom large over supply-shortage derailing the vaccination drive of the government. A global vaccine powerhouse falling short of doses for its domestic needs presents a worrying signal to countries across the world that are leaning on India’s ability to produce vaccines for their respective vaccination drives.
With an established pharmaceutical industry and a strong network of manufacturing units one should ask if this is because of the absence of production capacity or the presence of misdirected policies. While external factors, such as the United States holding back critical raw materials, have hit domestic production, many of our domestic policies have compounded the problem of shortage.
Open Up Vaccine Space
As of date, only two vaccines in India have received approval by the regulator namely, the SII produced Oxford-AstraZeneca vaccine called Covishield and the Bharat-Biotech produced Covaxin. India’s inoculation efforts are now conditional on the stretched production capacity of these two manufacturers. Thus, the only way to achieve vaccination on a large scale in a short time is to have more vaccines.
India’s approval system has subjected foreign pharmaceuticals to multiple regulatory compliances, resulting in restricting the production of vaccines that are elsewhere approved and have undergone clinical trials. US pharmaceutical company Pfizer had applied for authorisation for its mRNA vaccine, but it was not approved citing reasons such as lack of immunogenicity data among locals, robust storage requirements, and high costs.
First, a vaccine successfully tested in the US, the European Union, etc. makes regulatory free-riding possible. We should consider accelerating domestic approval by banking on approvals done by matured regulatory agencies abroad.
Second, in the event of domestic shortage as is reported now, dismissing approval of promising vaccines such as Pfizer on the grounds of it being costlier will exacerbate the crisis.
A category we are missing out here is the segment who can afford to pay for costlier vaccines. There are many who are immunocompromised and fall outside the threshold of the government-mandated criteria for vaccination. While the government can proceed with inoculating its target audience at low costs, the restriction placed on individuals who have the ability to pay, will only dwarf the efforts of immunising the population.
Many private firms have shown interest in vaccinating its employees. Such interests are a win for a society that is trying to achieve immunity against the disease. The government should permit vaccine producers to sell their doses commercially more so because the manufacturers can scale up their production. This will help the government to direct the free and subsidised doses to the poorer and underserved sections, while ensure wider coverage of people once it takes the commercial route. We are looking at nation-wide vaccination at a scale and speed never seen before. Thus, it is important that the government leverages the capacity of the private sector to achieve its objectives.
Pitfalls Of Price Capping
Regulatory pricing is another policy choice that the government has been exercising in the sector, but it acts against the intended goal. Recently, the CEO of SII indicated that the price that is fixed by the government is not enough to sustain further expansion in production. Sources citing Pfizer and Moderna stated that “they want to produce vaccines in India but they fear price control policies”. Contrary to the intention of bringing accessibility, such market distortionary mechanisms restrict the supply of vaccines in the market.
A uniform price capping of vaccines acts as a deterrence to expand production as many small scale firms find it unviable to produce at a price below their cost of production. With more international collaborations and better competitive space, domestic firms can scale-up and bring down the costs eventually. However, with price controls, potential players and collaborators would receive wrong signals that prevent their entry into the Indian market. This prevents not just production but also its scope of scaling it up.
Indian firms have the capacity to ramp up production but it requires domestic policies to allow faster clearance of foreign approved vaccines; and, decontrol the operations of the market. The pandemic has built a culture of increased collaborations and network among and between pharmaceutical companies and government entities. The willingness to collaborate and transfer technological know-how exists, but it requires enabling policies at the national level to foster such associations.
It is, therefore, crucial to address some of these areas as India holds a vital role in enabling access to both domestic and global citizens.
This article was published in Money Control on 13 April, 2021. Click here to read
Views expressed by the author are personal and need not reflect or represent the views of Centre for Public Policy Research.
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