Covaxin maker Bharat Biotech has said the ₹150 per dose price at which the vaccine is being supplied to the Centre is a non-competitive price and “clearly not sustainable in the long run”.
A higher price in private markets is thus required to offset part of the costs, the Hyderabad-based vaccine maker said on Tuesday amid questions on the differential pricing followed for supplies to government and private sector.
Facts on record
The statement “to place facts on record” also assumes significance as it comes in the run-up to the Centre’s revised policy under which it will procure vaccines for the States too and make the jabs free to all those over 18 years of age at government centres. Separately, the Centre had also said private hospitals cannot charge more ₹1,410 for the vaccine.
While supplying to the Centre at ₹150 a dose, the company had set ₹400 as the price at which it will provide the vaccines to State governments and ₹1,200 to private sector. It had earlier set the rate for States at ₹600.
The Bharat Biotech statement said as directed by the Centre, less than 10% of the production of Covaxin to date has been supplied to private hospitals, while most of the remaining quantity was supplied to the Central and the State governments. “In such a scenario the weighted average price of Covaxin for all supplies realised by Bharat Biotech is less than ₹250 per dose. Going forward, around 75% of the capacity will be supplied to the governments with only 25% going to private hospitals.
Unlike most medicines and therapeutics, vaccines are provided free of cost by the Centre to all eligible citizens. Hence, procurement by private hospitals is optional and not mandatory, albeit it gives a choice to citizens who are willing to pay for better convenience, it said.
“In our view, the question of product pricing is only of extraneous interest to all concerned, especially when the same vaccine is made available free of cost,” the firm said.
On the pricing of the vaccine for private sector players being significantly higher than that at which supplies were made to governments and large procurement agencies, the company said “this is purely due to fundamental business reasons, ranging from low procurement volumes, high distribution costs and retail margins”.
Bharat Biotech said pricing depends on a number of factors, from cost of goods and raw materials, product failures, at risk product development outlays, product overages, capital expenditure for setting up sufficient manufacturing facilities, sales and distribution expenses, procurement volumes and commitments besides other regular business expenditures. The company said it has thus far invested over ₹500 crore at risk from its own resources for the product development, clinical trials and setting up of manufacturing facilities for Covaxin.
“The support from the Indian Council of Medical Research (ICMR) was with respect to provision of the SARS-CoV-2 virus, animal studies, virus characterisation, test kits and partial funding for clinical trial sites. In return for this valuable support, Bharat Biotech will pay royalties to the ICMR and the National Institute of Virology (NIV), based on product sales. Royalties are also payable to Virovax towards the licensure of IMDG agonist molecules,” the release said.