Are Bharat Biotech’s Prices for Covaxin Justified?

A medic prepares a dose of Covaxin vaccine for a beneficiary at Sir J.J. Hospital Hospital, Mumbai, January 27, 2021. Photo: PTI/Mitesh Bhuvad

Bharat Biotech, the Hyderabad-based pharmaceutical company that manufactures Covaxin, sharply increased the prices of the COVID-19 vaccine. It now costs Rs 600 per dose for state governments and Rs 1,200 per dose for private hospitals. The Centre can continue to purchase Covaxin at Rs 150 per dose, in continuation of the terms that applied in the phases of India’s vaccination drive until May 1.

The price revision came just days after the Central government, in a surprise move, deregulated the COVID-19 vaccines market and permitted the direct sale of vaccines to state governments and private entities — while reserving 50% of the production to itself at the existing price. The manufacturer was free to fix the price for the balance 50%.

Bharat Biotech justified the high price saying that it needs to recover the cost of product development, manufacturing facilities and clinical trials. The company also intends to sell Covaxin in the international market $15-20 per dose (Rs 1,125-1,500).

Serum Institute of India, the only other COVID-19 vaccine manufacturer in India so far, had earlier announced its own prices for Covishield, the Oxford-AstraZeneca vaccine that it makes: Rs 400 per dose for state governments and Rs 600 per dose for private hospitals.

Serum also has orders for Covishield at different rates: 200 million doses for the Covax vaccine alliance at $3 (Rs 225) per dose and 30 million doses to Bangladesh at $4 (Rs 300) per dose. Neither price, of course, is as high as the one it has specified for India. (Serum also has other orders whose rates aren’t in the public domain.)

In addition, millions of doses of this vaccine, manufactured by AstraZeneca in the UK, have been supplied to the UK for $3 (Rs 225) per dose and to the European Union at $2.15 (Rs 160) per dose. The US has purchased some quantities, though they haven’t been used yet, at $4 (Rs 300) per dose.

AstraZeneca and Oxford University have also pledged that their vaccine will be available at affordable prices “in perpetuity” in low- and middle-income nations. But through its latest price revision, Serum Institute appears to have overlooked this pledge.

The only other COVID-19 vaccine that India has so far approved for use in its vaccination drive, Sputnik V, received the approval for restricted use from the Drug Controller General of India on April 13. The likely price of the first “hundreds of thousands” of doses, imported from Russia, is Rs 750 per dose. The price of locally made doses are bound to be lower. However, this price point emerged before Bharat Biotech revised Covaxin’s prices.

The other two vaccines that may be available over the next few months in India are from Pfizer and Johnson & Johnson, although neither company has applied for approval in India yet. Pfizer recently offered to supply its vaccines to India at a not-for-profit price, but only through the government.

This said, the prices aren’t yet clear. Since starting production, Pfizer has supplied vaccines to the US at $19.50 (Rs 1,462) per dose, to the UK for around £15 (Rs 1,500) per dose and to the EU at $12 (Rs 900) per dose.

There has yet been no indication of the price of the J&J vaccine, although its price is known to be $10 (Rs 750) in the US.

Notably, the J&J vaccine vaccine is a single-dose vaccine while all others are double-dose, with the interdose duration varying from 21 days to 8 weeks.

Expansion plans

So for some reason, both of India’s indigenous manufacturers intend to charge the highest price in India for their vaccines – and Bharat Biotech wants to charge a premium over Serum’s price.

Before it released the revised price, Bharat Biotech shared the interim results from its phase 3 clinical trials of Covaxin, its plans to enhance capacity and to enter new markets, probably in a bid to prepare the ground for its big bang price announcement.

The interim results, announced on April 21, were based on the phase 3 trials involving 25,800 participants. The data suggested the vaccine had an efficacy of 78% against mild and moderate COVID-19 and 100% efficacy against severe disease. The final results are expected in June.

At the time of its approval, by the Drug Controller General of India, Covaxin’s efficacy hadn’t been backed by any results from large scale trials, even as experts have questioned the conduct of the trials themselves. So the strength of the interim results was considered a welcome addition to the public knowledge of Covaxin, more so since Covaxin is indigenous.

Bharat Biotech also announced a major enhancement of its capacity to 700 million doses per month, with an assurance that it has secured all materials to meet its requirements. The company has tied up with Indian Immunologicals Ltd. and is in talks with manufacturers abroad for production.

Bharat Biotech also intends to export Covaxin across the world, and has already obtained emergency use authorisations in Mexico, Philippines, Iran, Paraguay, Guatemala, Nicaragua, Guyana, Venezuela, Botswana and Zimbabwe, among other countries. Its applications are being considered in the US and several European countries. Company chairman Krishna Ella has in the meantime assured the national government that it will prioritise India.

The company did suffer a significant setback recently, however, when Brazil’s national drug regulator denied it a ‘good manufacturing practices’ certificate after inspectors were dissatisfied with quality control protocols at Bharat Biotech’s Indian facilities. It is not yet clear how this will affect Brazil’s plan to import Covaxin — a delay, a complete cancellation or partial cancellation.Note that the company already exports its other vaccines to many countries in South America, Africa, Europe, the Middle East and Asia.

Now, the company that has been a minor player in the COVID-19 vaccine market so far aims to establish itself as a major player in national and international markets as well.

§

As of April 26, according to the Co-Win dashboard, 13.1 million doses of Covaxin had been administered, out of 142.5 million – about 9.2%.

Bharat Biotech has thus far exported Covaxin to Mauritius (0.2 million doses) and Iran (0.125 million), and has sent grants at the Indian government’s behest to Myanmar (0.2 million), Paraguay (0.2 million) and Zimbabwe (0.035 million). This is a total of 0.76 million doses.

The current total output of Covaxin, at under 4.5 million doses per month, based on these figures is quite small compared to the demand for them.

When announcing capacity expansion, the company didn’t say when the increased output will be available, although Ella has reportedly said his company intends to produce 30 million doses per month and increase it soon to 70-75 million doses per month, to meet the increased demand from May 1. The Centre has said that Bharat Biotech will supply 90 million doses to it by July at the pre-agreed rate.

It’s obvious that for this event to come to pass, Bharat Biotech will have to supply 30 million doses per month to the Centre from May to July, if it intends to produce 30 million doses from May itself. Otherwise, the supply time may be stretched further.

A question sent to the company about the timeline for capacity enhancement hadn’t elicited a response at the time of publication.

A direct inference is also that supplies of Covaxin directly to state governments or private entities are highly unlikely to happen before August, even if the state governments will receive some quantities via the Centre.

The pricing logic

Two statements in the last few days, one from a government source and another from unnamed company sources, explain the thinking behind Covaxin’s price rise.

India’s principal scientific advisor and co-chair of the COVID-19 vaccine task force, K. VijayRaghavan, expected the vaccine capacity to increase exponentially. He said in an interview that the government would ensure pricing and availability are determined in a transparent manner and that the pricing remains affordable. VijayRaghavan compared the Indian price of $2 (Rs 150) with international prices of COVID-19 vaccines, which are generally higher.

Since the international price of the Oxford-AstraZeneca shot is lower than $20, the reference is probably to Bharat Biotech’s stated prices ($15-20 in the international market) and Pfizer’s prices. It’s strange that such a senior official should seek to justify high prices sought by a private company in these desperate times.

The second statement, from unnamed company sources, claims that details of costs of production and mark-up had been shared with Prime Minister Narendra Modi on April 20 and that the Centre was aware of the pricing logic. Apparently, “the cost of hospitalisation due to COVID-19, which comes to the tune of Rs 5 lakh, the cost to the economy due to the pandemic and the future scope for innovation” along with the R&D costs, form the core justification for the revision.

While it wasn’t clear which company the sources were referring to, a statement that the company had received advance orders to export at $15 per dose suggests it is Bharat Biotech.

Such logic is reminiscent of the practices of big pharma companies, especially in the US. Since the 1990s, these companies have fixed the prices of their new drugs based on ‘value to patient’, which would obviously be much higher than a price calculated on a ‘cost plus profit’ basis. That this practice made life-saving medicines unaffordable for millions of poor people, including in the US, is well-known.

In fact, India became the ‘pharmacy of the world’ by providing cheaper substitutes. And now for India to resort to this unhealthy practice in its quest for atmanirbharta1 is unacceptable. How can India take pride in an indigenous vaccine if it is going to be unaffordable for its own citizens?

The announcement of a sharp upward revision by indigenous manufacturers will also likely queer the pitch for the import prices of other vaccines, like those of Pfizer, as and when the deals go through.

The government should remind Bharat Biotech that the Indian Council of Medical Research had co-funded the clinical trials and that the Centre has agreed to advance Rs 1,500 crore to help the co. improve manufacturing capacity. The government should expedite the actual disbursement – and it should stake some claim to the technology since the virus strain had originally been isolated by the National Institute of Virology, Pune. Finally, the Centre should have other manufacturers make Covaxin.

Facing severe criticism from states, press and health experts, the Centre has asked both Serum Institute and Bharat Biotech to lower their prices. It should take complete charge of procurement from both the companies and fix affordable prices allowing reasonable profits to the companies and share the expenses with the states. But if the government thinks that Bharat Biotech’s price is fair, then like western governments, it should bear the complete cost and not pass on any to the state governments or the people.

Acknowledging the fact that direct supplies from the company won’t be available soon, state governments should not have to compete with each other to release confirmed orders at the high prices. Instead, they should jointly insist that the prices are brought down. The states should also communicate transparently to the people the realities of the vaccine stock and availability.

The Centre needs to step in, sooner rather than later, with some relief in order to settle this gallimaufry of prices, availability, fragmented distribution and an unhealthy competition between its two indigenous manufacturers — which its measures have created.

Whether it will do so is anybody’s guess.

Neeta Sanghi has over three decades’ experience in managing pharmaceutical supply chains. She is currently working on a book about the industry.


  1. Hindi for self-sufficiency

Scroll To Top