The real cost of immunizing everyone

What is the total cost for the government to vaccinate everyone in India? The calculation is simple but the answer varies a lot depending on the assumptions you make.

We know that our total population is around 135 crore, and our adult population (over 18) would be between 85 crore and 90 crore. According to several accounts, the union government has so far bought doses of Covishield vaccine for Rs 150 from the Serum Institute of India (SII). The price he pays for Bharat Biotech’s Covaxin, according to the company’s statement, is the same. Now if we assume that 90 crore adults will need two doses each, the number of doses needed is 180 crore. Multiplying 180 crore doses by Rs 150 per dose brings us to Rs 27,000 crore.

Interestingly, this represents a good Rs 8,000 crore – a shade of over $ 1.06 billion in savings over the Rs 35,000 crore that Finance Minister Nirmala Sitharaman told us was allocated to the program. vaccination this year. And she also said that if more money was needed, it would be found.

This is of course the first big question.

But so far the union government hasn’t really come out and said why it doesn’t want to vaccinate everyone. What he said was that vaccine makers should keep half of their production capacity for union government and use the rest for state governments and private hospitals for higher fees.

Naturally, this seems to indicate that the unity government now only wants to immunize half of the country’s adult population through its own budgets. This means that he probably intends to spend only Rs 13,500 crore of his initially allocated Rs 35,000 crore and leave the rest of the vaccination to state governments and individuals. This would save him a huge crore of Rs 21,500 while adding to state budgets and those of individuals.

But then states will have to pay a lot more if they vaccinate the rest of the population with their own budgets. This is because SII intends to charge them Rs 400 per dose, while BB will charge states Rs 600 per dose.

If all the states bought only from SII, they would collectively end up paying not the 13,500 crore rupees that the union government spends to vaccinate 45 crore adults but 36,000 crore for the exact same number of people.

But then, they can’t just buy from SII because the company doesn’t have the capacity to provide the full amount. So they should also buy a certain amount from BB. But BB costs even more. If states were to vaccinate even 10 adult crores using the BB vaccine, they would end up paying Rs 12,000 crore for those doses. Another 35 crore vaccinated using the SII vaccine would total Rs 28,000 crore. Thus, their bill climbs to Rs 40,000 crore. The more BB vaccines they use, the more their cost increases.

On the other hand, the trade union government remains rather happy because it is saving a lot compared to the amount it had initially allocated. This saves Rs 22,500 crore which is not a small amount in the economy.

There are three questions that arise? Why has the government changed its mind about spending all the money it originally budgeted for? And second, why are the costs to state governments and private hospitals so much higher than what it costs the unity government? And finally, why do two vaccines that the union government buys for exactly the same amount – 150 rupees per dose – cost so dramatically different for state governments and private hospitals? This is why a vaccine for which the union government pays 150 rupees ends up costing the state government 400 rupees, while one that also costs the union government 150 rupees costs the state governments 600 rupees. .

Private vaccine producers are making a profit, whether in India or abroad. What is less clear is the exact motivation of the unity government to give the green signal to these prices.

Many people on social media argue that in open markets, private companies can set prices however they want or what the market is willing to pay. This is a slightly specious argument, because when the regulator and the government control the players by allowing only a few on the market while many others wait on the sidelines, it changes the rules of the game. free market, it becomes a government-sanctioned duopoly or oligopoly (assuming Sputnik V hits the market soon). And this is not a good thing for the citizens.

Prosenjit Datta is a former editor-in-chief of Businessworld and Business Today magazines. This has been reproduced from his website prosaicview.com with his permission. Opinions are personal.

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