Modi’s Vaccine Policy Comes Half Undone – And That’s A Good Thing

The Modi government has fixed two critical flaws in its vaccine policy by rolling back the mandate that states must procure vaccines for 18 to 44-year-olds.

Starting June 21, the central government will purchase and allocate doses to states free to inoculate those above 18 years, Prime Minister Modi said today. This effectively reverses the centre’s April 19 policy that lowered the eligible age to 18 years and said states will have to purchase vaccines for 18 to 44-year-olds, whereas the centre would continue to procure and vaccinate free those above 45 years.

The roll back partly redeems a vaccine policy so flawed that the Supreme Court in its June 2 order found it to be “arbitrary and irrational”. And demanded to see the entire policy document, notings and all.

So what attracted such censure from the apex court that eventually resulted in a policy roll back?

In defending its vaccine policy, especially phase three, the central government presented arguments that defied economic logic, ignored market realities and failed to pass muster with the judges.

It argued that competition among states, for vaccine supply, would attract more private manufacturers and eventually drive down prices.

The three judges reminded the government that two producers and 36 buyers make it a sellers’ market not a buyers’ one.

(Rightly so, as both producers announced higher prices for states until the centre intervened.)

The government argued that it paid a lower price for vaccines versus states because it placed larger orders.

The court responded by asking why the central government wasn’t using this purchasing power to buy all the vaccines and benefit the public exchequer. After all, central and state governments both spend taxpayer money to buy vaccines.

(To be clear, as per the April 19 policy the Centre would vaccinate 30 crore Indians, the states 90 crore Indians.)

The government said it was removing bargaining disparities among states by fixing vaccine allocation pro-rata, even for doses being paid for by states.

The court asked if floating migrant worker populations had been factored in. And whether other criteria such as healthcare infrastructure and state capacity had been given consideration.

(SBI Research found some states were getting less vaccines than they should have.)

The government claimed its 50-25-25 policy (50% domestic supply to centre, 25% to states and 25% to private hospitals) would reduce the operational stress on governments.

The court raised several concerns – Can 25% of state population afford to pay? Shouldn’t private hospitals’ pricing of vaccines be regulated? Won't private hospitals as for-profit entities prefer to sell via lucrative deals to corporations? Most private hospitals are limited to bigger cities, what about rural areas? And so on...

(Indian Express reported 9 private hospital chains cornered 50% of doses.)

Eventually, this criticism too struck home, and Prime Minister Modi announced that private hospitals could charge only up to Rs 150 per dose as a service charge besides the vaccine cost. But it has persisted with the inequity of allocating a fourth of all domestic supply to private hospitals.

In truth, as the court pointed out, the Modi government’s liberalised vaccination policy was anything but.

The centre controlled all allocation of vaccines and price was pre-fixed by the two domestic producers. The only freedom states had was to import vaccines but there too supply is short and foreign vaccine companies have said they prefer negotiating with the centre rather than several individual states and would like country-wide indemnity.

Faced with these infirmities in the government’s vaccine policy, lack of reasoned justification and a severe shortage of vaccines the court not only asked for all the policy documents, a rare expression of mistrust, but also posed 20 further questions that the government has till June 16 to reply to.

By rolling back its policy, the government has made the right policy move towards smarter procurement and saved itself further embarrassment in court.

It subsequently, in revised guidelines issued on June 8, permitted both online and on-site registrations for individuals and groups, thus addressing the issue of access raised by the Supreme Court as fundamental to the rights to health and life.

That's two big concerns addressed and one still to go. The critical question of vaccine supply.

So far, of the 180-200 crore doses targeted 23 crore vaccine doses have been administered. The union government claims it will vaccinate 100 crore Indians (200 crore doses) by December-end.

The three judges are among a billion Indians waiting to find out how.

Menaka Doshi is Managing Editor at BloombergQuint.

Note: This column was updated to include mention of the revised vaccination guidelines issued on June 8.