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SC QUESTIONS CENTRE’S PRICING POLICY OF COVID VACCINE

May 4, 2021

With India facing an unprecedented rise in daily number of Covid positive cases, the Supreme Court in a suo moto Writ Petition titled In Re: Distribution Of Essential Supplies and Services During Pandemic[1] sought for an explanation from the Central Government regarding the rationale behind the pricing of Covid vaccines.

CONTENTS OF THE COURT’S ORDER

The Hon’ble Supreme Court, under the powers conferred in Article 32, is currently hearing a suo moto writ that is seeking answers from the Central government on the issues pertaining to adequate supply of oxygen, availability of essential drugs, and streamlining the modalities for vaccination.

At the same time that the Hon’ble Supreme Court is taking up this writ, several High Courts all across the country are also grappling with the practical issues and problems which have arisen in their jurisdictions as a result of the outbreak of the pandemic. Therefore, the Supreme Court specifically stressed on the fact that “The role of this Court in the present situation is complementary to the role and functions being performed by the High Courts. Neither is intended to substitute the other. Indeed, there may be certain national issues or issues of a systemic nature which have their origin beyond boundaries of a particular State. These issues which travel beyond state boundaries will require a comprehensive national approach if we are to alleviate the immense suffering caused by the pandemic. It is with the consciousness of this duty that this Court has assumed jurisdiction under Article 32 of the Constitution. Thus, we clarify that the High Courts shall not be restrained by the pendency of these proceedings in passing appropriate orders to deal with the emerging situation in each State or Union Territory concerned, as and when necessary to do so.”

CENTRE’S PRICING POLICY FOR COVID VACCINE

During the course of the hearing, a Bench comprising of Hon’ble Justices DY Chandrachud, L Nageswara Rao and S Ravindra Bhat, amongst other things, asked the Centre to explain and clarify in an Affidavit “the basis and rationale adopted in regard to the pricing of vaccines”.

Currently, the Centre’s vaccination policy permits private vaccine manufacturers to set the price of a vaccine themselves. Bharat Biotech, which produces the indigenous vaccine Covaxin, had decided to sell it to State Governments at INR 600 per dose and to private hospitals at INR 1200 per dose. Whereas Serum Institute of India, is selling its ‘Covishield’ vaccine at INR 400 per dose to the State Governments and to private hospitals at the rate of INR 600 per dose. However, on April 28, 2021 SII’s CEO, announced in a tweet that as a philanthropic gesture, they have reduced the price of Covishield to INR 300 per does for State Governments.  Be that as it may, it is pertinent to mention here that both of these vaccines are sold to the Central government at a measly rate of INR 150 only.[2]

Furthermore, with the Government announcing that from May 01, 2021 people above the age of 18 shall become eligible to get the vaccine, the Supreme Court was also curious to know how the Centre plans to meet the increased demand that will inevitably happen once 1st of May comes.

The Court also opined that given the state of affairs in this pandemic, now is the right time for the Centre to start invoking its powers under the Drugs Control Act for price control and the Patents Act for compulsory licensing.

‘Price gouging’ during a calamity has been the norm that businesses tend to follow in order to increase turnovers. Therefore, it has always been the duty of the Government to ensure that it protects the interest of its people and maintains a balance in the economy.

The Ministry of Health and Family Welfare through a press release had announced on April 19, 2021 that people above the age of 18 years shall be eligible for a vaccine[3]. In the process of celebrating this announcement, many managed to ignore the fine print of this press release, which amongst  other things laid down as under:

  1. Private vaccine manufactures need not supply the whole vaccine stock to the Central Government. They are allowed to sell 50% stock in open market, while the rest 50% should be given to the Centre.
  2. State Governments and private players have to purchase vaccines from open market at a price declared in advance by the manufacturers.
  3. Private hospital can provide vaccination at a “self-set vaccination price”, which should be transparently declared.
  4. The vaccines for the category 18-45 years will be through the open-market channel. In other words, they have to take vaccination from private hospital
    or the State government agencies
  5. The Centre will distribute its share of free of cost vaccines to frontline workers, health care workers and those aged above 45 years.
  6. The Centre has discretion to allot from its 50% quota a share to States based on a review of their performance and extent of infection

In view of the aforesaid, vaccination pricing policy, the Court has demanded an explanation from the Government on the rationale for differential pricing in regard to vaccines sourced by the Union government on one hand and the States on the other hand when both sources eventually lead to the distribution of vaccines to citizens.

For a welfare State like India, interest of the public and its health has always been the top concern.  The roles of the State and Centre cannot be distinguished in this regard. Therefore, to ask the State Governments to compete in open market for vaccine procurement, whilst the Centre gets to keep a guaranteed share for itself may hamper the process of smoothly rolling out vaccines for all. It was because of this very reason, the Supreme Court has also asked the Centre to apprise it on how the supplies of vaccine will be allocated between the various States if each State is to negotiate with vaccine producers.

SUPPLY OF OXYGEN TO STATES

The Supreme Court also sought for clarifications from the Union of India on the following issues concerning supply of oxygen to various States that been demanding for it:

  1. The anticipated demand for oxygen in the country at the present point of time as well as in the foreseeable future;
  2. The steps taken and proposed to be taken for increasing the availability of oxygen, in order to meet the current and anticipated need in the future;
  3. The monitoring mechanism for ensuring the supply of oxygen, particularly to critically affected States and Union Territories as well as the other areas;
  4. The basis on which allocation of oxygen is being made from the central pool; and
  5. The methodology adopted for ensuring that the requirements of the States are communicated to the Central Government on a daily basis so as to ensure that the availability of oxygen is commensurate with the need of each State or, as the case may be, Union Territory.

AVAILABILITY OF ESSENTIAL DRUGS AND COVID CENTRES

The Centre was also asked to inform the Court about the steps being taken to ensure essential drugs, including Remdesivir and Favipiravir, are available. It also asked for clarity on the modalities which have been set up for controlling prices of essential drugs, for preventing hoarding and for ensuring proper communication of the requirements at the level of each District by the District health authorities or Collectors to the Health Departments of the States and thereafter by the states to the Union Ministry of Health and Family Welfare so that the projected requirements are duly met and effectively monitored on a daily basis.

Similar information was also sought on how the Centre plans on enhancing the critical medical infrastructure, as well as on framing a policy on specifying the standards and norms to be observed for admitting patients to hospitals and covid centres and the modalities for admission.

These directions come at a time when several instances of hoarding and black marketing of Remdesivir have been unearthed by the police in several States. The situation had become so dire that States like Maharashtra have asked that the Centre should allow compulsory licensing of this drug, in order to curb the shortage being faced.

CREATION OF MEDICAL PANEL

The Court considered it necessary that in order to distribute authentic information about combating the pandemic, a medical panel consisting of experts should be nominated by the Centre. A method may be prepared by the Union of India to ensure that advisories are shared by this panel daily, and this same method can be replicated at all State levels as well.

HEARING ON APRIL 30, 2021

The writ was heard again on April 30, 2021, when the Court circled back on the issue that the Centre should not leave vaccine pricing on the manufacturers, but instead invoke its powers under Section 92 and 100 of the Patents Act, for compulsory licensing of the Covid vaccine.

The Court opined that India was at the forefront of negotiating of compulsory licensing in TRIPS, and the present pandemic is the most important case for invoking such powers of the Centre. Section 92 of the Patent Act provides that if the Central Government is satisfied in respect of any patent in force in circumstances of national emergency or in circumstances of extreme urgency or in case of public non-commercial use, that it is necessary that compulsory licenses should be granted to work the invention, it may make a declaration to that effect. Similarly under Section 100 of the Act, the Centre has the power to intervene, at any time after an application for a patent has been filed or the patent has been granted, for Government purposes.

The Court also asked the Centre that since vaccine manufacturing is being publicly funded, vaccines are therefore public goods. So why is the Centre only purchasing 50% of the vaccines, and leaving the States to fend for themselves in the open market?

We hope that when the matter is taken up next, the particulars of the vaccine price policy is taken up by the top Court in detail, so that it may allow the goal of universal vaccination to materialise.

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[1] SMW (C) No. 3/2021

[2] https://indianexpress.com/article/india/central-govt-asks-serum-bharat-biotech-to-cut-vaccine-prices-7290536/

[3] https://www.pib.gov.in/PressReleseDetail.aspx?PRID=1712710

 

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