May 24, 2021 ☼ The Intersection ☼ Covid-19
Let’s say Melon Rusk, one of the world’s richest billionaires, approaches the Indian government and makes an offer to deliver 2 billion doses of a covid vaccine within 2 months for ₹2 trillion. Should the government take the offer?
The country should not be distracted by the discourse on what it will cost to achieve this objective
This is from The Intersection column that appears every other Monday in Mint.
Let’s say a Mr Melon Rusk, one of the world’s richest billionaires, approaches the Indian government and makes an offer to deliver 2 billion doses of a covid vaccine within 2 months for ₹2 trillion. At ₹1,000 per dose, Mr Rusk’s price is at least three times that of domestic vaccines, and would make an incredibly rich man with a flashy lifestyle even richer. Should the government take the offer?
The right answer is yes, it should. Mr Rusk’s wealth, opportunism and lifestyle choices are irrelevant details and ought not to cloud our mind. Last year, the Indian economy shrank 8% due to disruptions caused by the pandemic. By this estimate, the ₹195 trillion Indian economy might be currently losing ₹300 billion every week. The financial cost of vaccinating everyone will be ‘recovered’ by the Indian economy in less than two months. The government’s own ‘business case’ for vaccination is an open and shut affair. If the economy shrinks by 8% this year, the Union and states together would suffer a revenue loss of ₹2.3 trillion (as the overall tax-to-GDP ratio is around 15%). The government should thus pay Mr Rusk ₹2 trillion to avoid suffering a bigger revenue loss.
These rough estimates highlight three important points. First, that it makes abundant sense for the government to finance the cost of universal vaccination. Second, at this time, how much the vaccine costs is less important than how much and how fast it is available. Third, it does not matter which government—Union or state—is paying, as long as the citizen gets the vaccine free.
Unfortunately, a lot of the public and political discourse in India is still caught up with pricing, the level of profits that manufacturers are making, and which government should bear the fiscal burden. The behaviour and utterances of some vaccine manufacturers have not helped either. Most importantly, the Union government has not bothered to explain the rationale of its vaccination policy, thereby both isolating itself and preventing public debate from being more constructive.
A democracy is only as good as its discourse. If it is misdirected, the political priorities go askew and public outcomes suffer. This is not a time to obsess about prices, image or narrative. The most important national priority is to vaccinate everyone as fast as possible. Like China, India can achieve 10 to 20 million jabs per day if we recognize our strengths and play to them. So how do we get that many doses, and how do we administer them fast?
In the past few weeks, the government has taken the crucial step of opening the Indian market to all vaccines approved globally. The types of vaccines available has gone up from two to eight, and the government expects over 2 billion doses to be available by December. Given that there can be many a slip between the cup and the lip, the government must focus on making more vaccines available, and available faster.
We need more than 300 million doses a month. Will compulsory licensing and patent waivers help? The historical discourse on this topic has been focused on lowering the cost of essential drugs. In our case and at this time, the issue is not cost, but quantity. It is unclear that compulsory licensing will by itself lead to additional manufacturing capacity coming online fast enough. But there is no harm in trying.
There is a ready case for the government to let Covaxin be manufactured by more companies, with free licensing for domestic markets until the pandemic has ended. Bharat Biotech should be compensated if necessary. This will enable state governments and private manufacturers to explore how they can create or use existing plants to produce vaccines. The Indian government will be justified in doing the same for Oxford/AstraZeneca and other vaccines, but it is prudent to start with the partly-publicly funded indigenous vaccine.
Some of the heartburn over the liberalized vaccination strategy is unwarranted. Equity considerations can and should be addressed by the government making vaccines available to everyone free of cost. As long as this baseline is ensured, there is no equity argument against private and decentralized vaccination. Also, the government’s vaccination programme can respond to epidemiological triggers by redirecting its supplies to where they are needed most.Finally, it is misplaced thinking that government channels alone can take us to 10 million jabs per day. Remember, large-scale covid testing took off only after private labs were allowed to carry them out. The Indian healthcare model is a mixture of the public and private, the Union, state, municipal, panchayat, NGO and, yes, unfortunately sometimes the shady and underhand. But now is not a time to pass judgement on it or attempt its reform—now is a time to put it to work. The government’s role is to enable the system, not fight it.
There are many more The Intersection columns here
Mr Melon Rusk, by the way, is a fictitious character. But if we agree that it is sensible to accept his offer, we need not begrudge paying our domestic manufacturers ₹300-400 per dose. For a billion people, the cost is a mere 0.4% of GDP and incurring it could allow the government to recover 2.5 times that amount in otherwise lost taxes this year.
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