“Rs. 150/dose not sustainable”: Bharat Biotech justifies its higher price fixing on Covid-19 vaccine Covaxin to private players

Hyderabad: Justifying higher price of COVID-19 vaccine 'Covaxin' to private players, Bharat Biotech, the Hyderabad-based pharmaceutical company that manufactures Covaxin, on Tuesday said that a higher price in private markets is required to offset part of the costs.

The company has priced its Covaxin for supply to the government at Rs 150 per dose and Rs 1,200 to the market and was selling the vaccine to states at Rs 400 per dose before the Central government decided to procure and supply it to the states.

Bharat Biotech sells its vaccine at double the price of its competitor Covishield, manufactured by Serum Institute of India, in the market.

The prices for COVID-19 vaccines internationally have varied between $10 to $37 / dose, (Rs730 - Rs. 2700/dose).   

Vaccine pricing depends on numerous factors, the vaccine maker in a statement said that 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.

It is pertinent to place facts on record for the media and the public at large to understand and appreciate our efforts, it said the whole-virion Inactivated Vero Cell vaccines (COVAXIN- derives 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 save the outcome of a highly purified and safe vaccine.

This is evident from the excellent safety contours of COVAXIN - with an impressive supply of more than 40 million doses to date, it said it is emblematic that Bharat Biotech has not sought Indemnity from the Government of India for any adverse events from COVAXIN. 

In fact, 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, however in the same quantity of live virus vaccines can be manufactured from mere 1,500 sq meters, it claimed.

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, it said.

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 statement added.

Explaining why COVAXIN for private sector players which is significantly higher than that given to Government and large procurement agencies, the statement said this is purely due to ' fundamental business reasons', ranging from low procurement volumes, high distribution costs and retail margins among few others as explained.

As directed by the Government of India, less than 10 percent 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, it said.

In such a scenario, the weighted average price of COVAXIN for all supplies realized by Bharat Biotech is less than Rs. 250 per dose, the statement said 75 percent of the capacity will be supplied to State and Central Governments with only 25 percent going to private hospitals.

The supply price of COVAXIN to the government of India at Rs. 150 / dose, is a non-competitive price and 'clearly not sustainable in the long run', Bharat Biotech clarified.

There are live examples of such pricing policies where Human Papilloma virus vaccine is priced for GAVI supplies at $ 4.5 / dose (Rs 320), but is also available in the private market at Rs. 3500 / dose.

Rotavirus vaccines are supplied to the Government of India at Rs. 60/ dose, but is also available in the private market at Rs. 1700 / dose, it said.

Unlike most medicines and therapeutics, vaccines are provided free of cost by the Government of India to all eligible Indian citizens, however, 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, the statement said.

In our view, the vaccine maker said that the question of product pricing is only of extraneous interest to all concerned, especially when the same vaccine is made available free of cost.

Bharat Biotech has so far invested over Rs. 500 crore 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 characterization, test kits and partial funding for clinical trial sites, it said.

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.

Bharat Biotech is investing in new facilities and repurposing existing ones across several states in India for enhancing the production of COVAXIN, the statement said.

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 - are also underway at our facilities, the vaccine maker informed.
Lastly, it should be noted that companies such as Bharat Biotech, which are innovators with specialized expertise in product development, and large scale manufacturing, should be allowed to maintain a differential pricing strategy for Governments and private hospitals.

It may well be argued that the low-price realization for home-grown innovators constraints 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 statement added. (UNI)