Explainer: Decoding SC order slamming Centre's vaccination policy

The Supreme Court released a 32-page order in the suo moto writ petition over the Court’s cognizance of the management of the COVID-19 pandemic during the second wave on its website on Wednesday (July 2).

A three-member SC bench comprising Justice DY Chandrachud, Justices L Nageswara Rao and S Ravindra Bhat issued the order which focussed on the vaccination aspect of the pandemic since the second wave had started to recede and “vaccinating the entire population was the only solution to combat the pandemic”. Hence, the SC’s May 31 order largely examines the policy threadbare and picks holes in the Centre’s vaccination policy, which is currently in its third phase.

Two recurring themes in the SC order

Two recurring themes keep appearing in the order. One is that the state/UT Governments have been left high and dry to fend for themselves in a situation where foreign vaccine manufacturers are not even willing to negotiate with them. The order observed: the state/UT Governments do not enjoy the unique position of the Union of India, which has the advantage of being a monopolistic buyer and can negotiate an appropriate price for the vaccines on behalf of the entire population of India”.

In this situation, the Centre pays ₹150 per dose for Covishield and Covaxin, while the state/UT Governments have to pay ₹300 and ₹400 per dose respectively. “If the UoI were to be the single procurement agency for all vaccines at a fixed cost, then the cost of vaccination to the public exchequer would be substantially lower,” the Court pointed out

Also read: New vaccination policy will lead to malpractices, inequities: Policy watch group

Secondly, the SC draws attention to the fact that the age group 18-44 years are being asked to pay for the vaccination when it has largely been free for the other age groups in phase 1 and 2 managed by the Central government. Again, it felt this category was being unjustly treated and left to their own mercy to get vaccinated from private hospitals/states.

How prepared is the government to vaccinate the entire population?

With regard to preparedness, the Centre has told the SC in its submissions before the apex court that it will be able to vaccinate a substantial number of persons (around 100 crore persons requiring 200 crore doses) by December 2021 the order stated. However, the SC said that the government has not shared any projections with them and it seemed that the government was relying on vaccines that were still in the “development stages” to reach its projected number of 200 crore doses.

“This approach would be misguided as the success and efficacy of vaccines that are currently in the stage of clinical trials is uncertain and cannot be guaranteed,” said the SC.

Talking particularly about the 18-44 age group, the SC said that with a population of 59 crores, this group would require around 122 crore doses. Based on reports, the existing manufacturers (Serum Institute of India and Bharat Biotech India Limited) will be able to produce less than 10 crore doses per month. Optimistically, around 15-20 crores doses of Sputnik V will be available per month.

Therefore, in the SC’s view: At this rate, it would take around 12 months for the population in this age group to be inoculated, by which time the virus may have mutated, causing further waves of the pandemic.

Also read: Vaccine deregulation is bad economics and sinister politics

The SC order lists the issues it has with the the Centre’s Liberalised Vaccination Policy

The SC tackles the vaccination policy from different angles: one is on the vaccine procurement and distribution among different categories of the population; the involvement of private hospitals; the differential pricing; the basis on which the Centre arrived at the pricing; availability of cold storage facilities and the digital divide created by compulsory vaccine registration on the CoWIN portal.

What SC said on the issue of vaccine distribution

The SC questioned the rationale behind the Centre prioritising age groups for free vaccination under the first two phases conducted by them. But making the state/UT governments and private hospitals charge for the age group between 18-44 years. This the SC said was “prima facie, arbitrary and irrational”.

On vaccine procurement-why cannot Centre itself buy 100% of vaccines at discounted prices?

Under the government’s vaccine policy, state/UT governments and local municipal bodies had to negotiate directly with foreign manufacturers. But they have been unsuccessful said the SC since “foreign manufacturers were not inclined to negotiate with individual state/UT governments and preferred negotiating with federal governments of countries.”

Additionally, the bench pointed out that the Central government is also better placed to use its monopoly as a buyer (India being the second most populous country) to bargain for higher quantities of vaccines at reasonable prices. The court said that on one hand, the Central government justifies its lower procurement prices because it places bulk orders, so why cannot the government use this same logic and buy up 100 per cent of the vaccines at a discount instead of leaving the states to fend for themselves? Since this would place severe burden on the states/UTs, which were already suffering from financial distress.

SC starts asking a string of tough questions and expects Centre to respond in two weeks. What are they? 

• Since the Central Government has financed (officially, ₹35 crores to Bharat Biotech and ₹11 crores to Serum Institute for phase 3 clinical trials) and facilitated production (or augmentation of production) of these vaccines. The SC has asked the Centre to clarify: “it may not be accurate to state that the private entities have alone borne the risk and cost of manufacture?”
• Given that the R&D cost and IP have either been shared between the Central Government and the private manufacturer (in case of Covaxin) or the manufacturer has not invested in R&D of the vaccine (in case of Covishield), how can the Centre justify intervening in pre-fixing procurement prices and quantities for states/UTs and private hospitals, but not step forward to impose “statutory price ceilings”?
• The SC has asked for comparison between Indian and international vaccine prices
• Whether it is permissible for state/UT governments or individual local bodies to access vaccine supplies of foreign manufacturers
• Moreover, Union Budget for financial year 2021-2022 had earmarked ₹35,000 crores for procuring vaccines. In light of the Liberalized Vaccination Policy, the Central government is directed to clarify how these funds have been spent so far and why they cannot be utilised for vaccinating the 18-44 years group?
• The number of crematorium workers vaccinated in phase 1. (The SC has pinpointed this cohort particularly and has also directed that they be vaccinated immediately)

Also read: India’s failure on the vaccine front, and what needs to be done now

Let’s get down to brass-tacks, the SC needs a roadmap

The SC has directed the government to place on record a roadmap of projected availability of vaccines till 31 December 2021; the preparedness with respect to specific needs of children in the event of a third wave of the pandemic in terms of medical infrastructure, vaccination trials and regulatory approval, and compatible drugs. The SC also raised the issue of black fungus and wanted to know what kind of treatment was being made available for it.

The matter of Digital Divide

The SC observed that the present system of allowing only digital registration and booking of appointment on CoWIN, coupled with the current scarcity of vaccines, will ultimately ensure that initially all vaccines, whether free or paid, will be largely availed by the economically privileged sections of the society and the urban lot. The SC was spot on in highlighting some of the drawbacks and inconsistencies in the country’s vaccination drive.

Quoting the Telecom Regulatory Authority of India report that out of the total population of 1.3 billion, only 578 million people in India (less than 50 per cent) have subscription to wireless data services, the SC sarcastically pointed out that it may not be feasible to require the majority of our population to rely on friends/NGOs for digital registrations over CoWIN, when even the digitally literate find it hard to procure vaccination slots.

What the SC said about role of private hospitals in this vaccination exercise

The SC has also questioned the manner in which Central government will monitor the disbursal of vaccines to private hospitals, specifically those who have hospital chains pan- India. Whether (i) private hospitals are liable to disburse vaccines pro rata the population of States/UTs; and (ii) the mechanism to determine if private players are genuinely administering the lifted quota in that State/UT alone or whether they are charging more.

The SC therefore asked: whether the Central government conducted a “means-test” of the demographic of a state/UT to assert that 50 per cent of the population in the 18-44 age group would be able to afford the vaccine. If not, the SC fired another salvo: what is the rationale for private hospitals being provided an equal quota for procurement as the state/UT governments?

What else the SC wants the Centre to place on the table?

Moreover, with the Centre claiming in its submissions to the apex court that the states have decided to vaccinate their populations free of cost, the SC asked each state and UT to file affidavits in two weeks whether they plan to carry out free vaccinations. Also, the SC sought data on rural population vaccinated so far since this entire exercise seemed urban-centric.

Importantly, it asked the government to annex relevant documents, including file notings to reflect the “thinking” that went into framing this entire vaccine policy and the subject of differential pricing, which has caused widespread heartburn.