Almost The Same: Here's The Only Thing That Will Change In Vaccine Procurement After Prime Minister Modi's Announcement

In an address to the nation yesterday (7 June), Prime Minister Narendra Modi announced a slight change in the vaccination policy. He told that the government was reverting to the old model of centralised procurement which was abandoned from 1 May after some opposition leaders put pressure on the Centre to give more freedom to states to buy doses from their own money.

Interestingly, when the Centre had decided to empower the states in vaccine procurement, the opposition leaders claimed credit for forcing Centre to give up its concentration of decision-making. Now that the Centre has returned to the old policy, the opposition is again thanking the Prime Minister for accepting their demands.

Perhaps, it speaks volumes of the opposition’s collective bankruptcy that when there was global as well as domestic supply shortage of vaccines, they demanded decentralisation and when the supply bottlenecks had started to loosen, they demanded procurement powers to be centralised. It takes special skills to time your moves in a way that you get the blame during the supply crisis and your opponent takes away all the credit when capacity is all set to increase many fold.

The only thing that the states ended up proving to the people of India is that vaccine shortage is not due to Centre’s inability to procure and that there are no vaccines lying around.

Nonetheless, apart from the political optics, the Prime Minister’s announcement is not a big deal that it is made out to be — both by the supporters and critics of the government. Of course, this can be true only if the decentralisation of the vaccination drive that started on 1 May was not a big deal either.

Under the ‘Liberalized and Accelerated National COVID-19 Vaccination Strategy’ announced on 19 April by the Centre, it was decided that 50 per cent of the total supply of doses produced by local manufacturers of Covishield and Covaxin will be allotted to the Centre. This will be provided to the states for free and cover those above 45+ age and those less than 45 if they have comorbidities. Most of readers would know this already.

But what many may not be aware of is the mechanism of division in the rest of the 50 per cent supply. As per the affidavit filed in the Supreme Court by the Union government on 9 May, this aspect was explained in detail.

This 50 per cent remaining supply was to be divided equally (25 per cent each) between the states and the private sector. This split was done at the state level.

“Out of the 50% quota allotted to each State, the division is made on 50%/50% basis,” the affidavit declares. Basically, half of the total supply of doses to any state will have to go to the private sector provided that the private sector in that state has made direct contracts with the manufacturers.

But how was the total supply for each state decided in the 50 per cent "other than the government of India" channel? It was done on the pro-rata basis.

”It is submitted that though the States are procuring the vaccines from the manufacturers, the Central Government has, in consultation with the vaccine manufacturers determined the pro-rata population of each State in the age group of 18-44 and each State will procure only that quantity so that there is no disparity in availability of vaccines between the States inter-se either based upon difference in their bargaining power or otherwise,” the affidavit said.

Moreover, the states couldn’t outcompete other states by paying a higher price to manufacturers. The Centre ensured uniform price for all states.

“It is submitted that though under the new vaccine strategy, it is for each State Government to procure the vaccines as stated above, the Central Government has, by conducting informal consultations with the vaccine manufacturers, ensured that the prices of vaccine is uniform for all the States so as to avoid any disparity resulting from one State ending up buying vaccine at a higher price than the other,” the affidavit clarifies.

Additionally, regular releases from the Press Information Bureau (like this) make it clear that the Centre alone was procuring all the vaccines from the manufacturers including on behalf of the states and supplying to them.

Essentially, the Centre decided the number of doses each state would get based on their 18-44 age group population and the vaccine manufacturers decided the price at which they will get (Centre ensured that all states got the doses at the same price). The only thing that changed from April to May was that the states started paying for 25 per cent supply quota.

Now, with the latest decision by the Prime Minister, the Centre will pay for the whole thing. That’s the only thing that will change now. There will be no impact on the people as they will continue to get the same percentage (75 per cent) of the monthly supply for free. For 18-44 age group, earlier the states were paying for the vaccination. Now, the Centre will foot the bill.

It is pertinent to note that though the private sector was allotted 25 per cent of the supply in May, it only got slightly more than 15 per cent perhaps because not enough hospitals ordered the doses from the manufacturers. Even out of the 1.2 crore odd doses the private sector received in May, it is reported to have utilised only around 22 lakh doses.

This is something that the Centre needs to monitor going forward. In June, around 4 crore doses will be available for the private sector and the supply is going to keep increasing every month. If the private sector continues to slack on the vaccination front, it would be prudent to cut its monthly procurement share down from 25 per cent to around 10 per cent.