Will the Modi government now do a U-turn on its 25% vaccine quota for the private sector?

Is yet another vaccine policy U-turn from the Indian government on its way?

In April, as vaccination centres around the country began to run out of doses and Covid-19 cases were beginning to spike, Prime Minister Narendra Modi’s government announced sudden, baffling changes to the country’s vaccine policy that it claimed would “liberalise and accelerate” the process. By June, it was clear that the government had only added unnecessary complexity and inefficiency to India’s vaccination programme. It wasn’t helping.

So it took a U-turn. Pressure from states and the Supreme Court forced the government to reverse course in June, though Modi attempted to portray this as an act of magnanimity.

Even while rolling back this plan, however, the government only undid one portion of the “liberalised and accelerated” policy – the part in which it had attempted to make the states responsible for procuring doses for India’s massive population between the ages of 18 and 45.

The other unusual aspect of the April policy – reserving 25% of vaccines for private sector entities that could charge citizens for doses – was retained, with some changes.

‘Liberalised and accelerated’

Most other major nations have distributed Covid-19 vaccines for free. Where the private sector is involved in delivery, as in say the United States, it is the government and not citizens that is charged. In many places, those receiving vaccinations are now even offered an incentive.

Yet in India, it was argued that allowing the private sector to get involved and to charge high amounts would incentivise vaccine production and make delivery more efficient.

“In its phase-III, the National Vaccine Strategy aims at liberalised vaccine pricing and scaling up of vaccine coverage,” the government said, in April. “This would, on the one hand, incentivize vaccine manufacturers to rapidly scale up their production and on the other hand, it would also attract new vaccine manufacturers. It would make pricing, procurement and administration of vaccines more flexible and ensure augmented vaccine production as well as wider availability of vaccines in the country.”

Many questions were raised about these claims, including by current and former advisors to Modi. For one, global and domestic vaccine supply was limited and already working at full-tilt in a pandemic. Where was this extra incentivised manufacturing going to come from?

Another obvious one emerged soon after the policy was put into action: With private hospitals charging up to Rs 1,000 to Rs 1,600 and more for just one dose, was it realistic to expect 25% of the population to access vaccines through this channel?

As Tata Institute for Social Sciences professor R Ramakumar put it, the private channel appeared to be a “reservation of vaccines for the rich”, flying in the face of the Supreme Court’s insistence that the inoculation policy had to be just, equitable and non-discriminatory.

‘Private sector energies’

On the side of those in favour of the policy, Ajay Shah and Amrita Agarwal argued in April that the private channel was a good thing.

“The union government has stepped back from blocking every other energy in the country in vaccination,” they wrote. “The 19 April decisions harness energy in thousands of organisations all across the country... The private sector will surprise us with innovation in business models, billing arrangements, etc... Private firms know how to segment the users into a large number of categories, and devise strategies for each of them. This is what a union government, which solves for one use case, is ill suited for.”

The private sector did indeed surprise the government, but not in the way it was hoping.

First, a day after Modi announced his vaccine policy U-turn in June, the VK Paul, chairman of the National Expert Group on Vaccine Administration for Covid-19 announced that the government was de-liberalising pricing.

“It is unacceptable that hospitals charge Rs 1,600 or even Rs 4,000 for vaccines that cost Rs 600. They must limit their price,” Paul said. Private hospitals would only be allowed a maximum of Rs 150 as service charge above the vaccine rate itself, effectively dismantling the earlier argument about price being an incentive that would accelerate the inoculation campaign.

Then in the last week of July, at a business gathering, Commerce and Industry Minister Piyush Goyal acknowledged that business lobbying had played a role in its vaccine policy, according to the Hindu:

“You all [in the private sector] demanded and I remember how much you all fought with me and sought that vaccination be opened up for the private sector. Today, you are not even buying those 25% of vaccines [allotted to you]...

Please also calibrate your actions once you get what you demanded...

I remember one industry group said ‘I will do one crore vaccinations’ and another said ‘we will go to remote areas and do it’. Nobody has gone to Bihar, Northeast, Jharkhand and Chhattisgarh to run campaigns to remove vaccine hesitancy and use up that 25% quota.”

U-turn

How did we go from the government promising that its liberalised policy would “ensure augumented vaccine production” and wider availability of doses, to ministers and officials berating the private sector for profiteering and failing to deliver what was promised?

An official reply to a question in the Rajya Sabha revealed that, between May 1 and July 15, only 7% of vaccines had been administered by the private sector, despite 25% of doses being kept aside over that same period. A government press release on July 15 acknowledged this, saying Union Health Secretary Rajesh Bhushan had termed “the slow pace of vaccination through the PCVCs as a cause of serious worry”.

Clearly, the private sector has not only failed to offer innovative solutions that would accelerate and broaden the spread of vaccines, it could not even keep pace with the government channel and was starting to be a drag on India’s ambitious plans to cover all adults by December.

As before, the it fell to the states to convey the truth to Modi’s government. Several chief ministers wrote to the Union government calling for a reduction in the percentage allotted to the private sector, down from 25% to 10% or even 5%, arguing that this would speed up the pace of vaccination.

And now, a News18 report has cited unnamed senior government officials claiming that the government “may reduce the 25% quota of vaccination supply for private hospitals, given their subdued response, and procure more on its end for supplies to states which have been asking for more doses”.

If that happens, it will only add credence to the now widely held belief that India simply did not plan to quickly inoculate all of its citizens in 2021, and then suddenly had to change tack as the second wave hit – leading to a panicked, misguided April policy change, that then took months to untangle. It also raises questions about the decision-making within government, and whether its susceptibility to the private sector lobbying acknowledged by Piyush Goyal is responsible for some of the mess.

Policymaking in a situation as complex and dynamic as a pandemic was always going to be complicated, and likely to involve failed bets or rejigged priorities. Yet the flaws of the April 19 policy were apparent to most from the beginning. Will there be a real reckoning for those within government who championed the changes or an honest examination of what went wrong?