Innovators with specialised expertise in product development, and large-scale manufacturing, should be allowed to maintain a differential pricing strategy for governments and private hospitals, says the Covaxin maker
Hyderabad: Amid reports of differential pricing of Covid-19 vaccines in private hospitals and for government supplies, Bharat Biotech stated that innovators with specialised expertise in product development, and large-scale manufacturing, should be allowed to maintain a differential pricing strategy for governments and private hospitals.
The company said, “It is distressing to see that a large country like India has a very basic level of innovation in vaccines and pharmaceutical products. It may well be argued that the low-price realisation for home-grown innovators constrains innovation and product development in India. In the absence of a dual pricing system, Indian vaccine and pharmaceutical companies’ risk being reduced to mere contract manufacturers with intellectual property licensed from other nations.”
The Hyderabad-based company said vaccine pricing depends on numerous factors. “At the outset, one must remember that the pricing of vaccines and other pharmaceutical products heavily relies on a series of factors; the cost of goods & raw materials, product failures, at risk product development outlays, product overages, the entire capital expenditure for setting up sufficient manufacturing facilities, sales and distribution expenses, procurement volumes and commitments besides other regular business expenditures,” the company added.
The whole-virion Inactivated Vero Cell vaccines (Covaxin derived from this technology platform) are highly complex to manufacture since the critical ingredient is based on live viruses which require highly sophisticated, multiple level containment and purification methods. Such high standards of purification automatically lead to significant process losses and low yields.
The company said, “This is evident from the excellent safety contours of Covaxin with an impressive supply of more than 40 million doses to date. It is emblematic that Bharat Biotech has not sought Indemnity from the Government of India for any adverse events from Covaxin.
The sheer complexity of the Covaxin manufacturing process is manifested by the fact that it requires about 10,000 sq meters of area to manufacture around 200 million doses of the vaccine annually. In comparison, the same quantity of live virus vaccines can be manufactured from mere 1,500 sq meters. Due to the highly contagious nature of the live SARS-CoV-2 virus, more stringent Biosafety Level-3 (BSL-3) containment facilities are required for the manufacturing of Covaxin.
Every batch of manufactured product is subjected to more than 200 quality control tests, prior to its release. “It is exactly this complexity that has kept away other companies from developing vaccines, especially whole virion inactivated vaccines. The SARS CoV2 virus provided by ICMR-NIV is also equally available to other manufacturers who wish to develop and manufacture such a vaccine. Companies would need access to cell lines, BSL3 manufacturing & quality control facilities, and several well-trained technical teams, to manufacture Covaxin.
The company said the higher price for the private sector is primarily due to fundamental business reasons, ranging from low procurement volumes, high distribution costs and retail margins among few others as explained above.
As directed by the Government of India, less than 10 per cent of our total production of Covaxin to date has been supplied to private hospitals, while most of the remaining quantity was supplied to State and Central governments. In such a scenario the weighted average price of Covaxin for all supplies realised by Bharat Biotech is less than Rs 250 per dose. Going forward, about 75 per cent of the capacity will be supplied to State and Central Governments with only 25 per cent going to private hospitals.
Bharat Biotech added, “The supply price of Covaxin to the Government of India at Rs 150 per dose, is a non-competitive price and clearly not sustainable in the long run. Hence a higher price in private markets is required to offset part of the costs.”
There are live examples of such pricing policies where Human Papillomavirus vaccine is priced for GAVI supplies at nearly $4.5 per dose (about Rs320), but is also available in the private market at about Rs 3,500 per dose. Rotavirus vaccines are supplied to the Government of India at Rs 60 per dose, but are also available in the private market at about Rs 1,700 per dose. The prices for Covid-19 vaccines globally have varied between $10 and $37 per dose (Rs 730-Rs 2,700 per dose).
Unlike most medicines and therapeutics, vaccines are provided free of cost by the Government of India to all eligible Indian citizens. Thus, the procurement of vaccines by private hospitals is optional and not mandatory, albeit it gives a choice to citizens who are willing to pay for better convenience.
“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 company said.
Bharat Biotech has so far invested over Rs 500 crores at risk from its own resources for 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 CoV2 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 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 company added, “Bharat Biotech is investing in new facilities and repurposing existing ones across several states in India for enhancing the production of Covaxin. It is pertinent to mention here that the urgent need to set up a significant number of manufacturing facilities and to divert existing ones for Covaxin, has resulted in reduced production of other vaccines at our facilities, leading to loss in revenues. We have been extremely diligent in selecting manufacturing facilities and partners, with the required levels of containment, capabilities and expertise. Product development activities towards the development of vaccines against newer variants is also underway at our facilities.”
Now you can get handpicked stories from Telangana Today on Telegram everyday. Click the link to subscribe.
Click to follow Telangana Today Facebook page and Twitter .