More on private sector in vaccination

I have blogged earlier questioning the belief in markets to deliver vaccines. Here is more from corporate leaders making their case for placing faith in markets,

Providing three quarters of all vaccines free addresses the issue of equity. Let the remaining vaccines find their own price in the market. In the current scarcity, prices will be higher than they should be. This high price provides the incentive for manufacturers and hospitals to scale capacity aggressively — exactly the action we want. As capacity ramps up, so will competition, forcing prices down and service up. That is how markets work.

There are several evidence-free and narratives-based claims here.

But there is already enough evidence to question the assumptions of those who place faith in the markets. 

This status check on Covishield vaccine stocks across states by The Indian Express is a good read. It informs that between May 1 to June 22, private hospitals purchased 1.97 Cr Covishield vaccine doses, administered 88.9 lakh doses as of June 22, and had 1.08 Cr doses left. 

The article illustrates empirically several teachable points which are matters of deep concern on a public good like vaccinations - massive variation across states on private sector purchases and in private sector administration rates, the variations being dictated almost completely by the backwardness and income levels of the states, heavy concentration of private vaccinations in the largest cities, relatively low rate of vaccination even in the states with the highest private sector vaccination rates, concentration of private sector purchase in a few corporate hospitals, predominance of private/corporate camps in the vaccine shares of private hospitals, already declining rate of vaccination in private clinics, and so on. The worst of them all is the presence of large numbers of vaccine stocks with a few private hospitals even as many state governments struggle on a hand-to-mouth existence without stocks. 

There is a very explicit rationing at play. Private market vaccines at market-determined rates is a mechanism to ration vaccines towards those who can afford (who form a tiny proportion of Indian population, mostly in urban areas and in a few richer states) and away from those who cannot afford (the vast majority, in slums and rural areas and in the largest and poorer states). 

Is this type of rationing what Econ 101 teaches us about delivering public goods? It's for this reason that every country in the world has mandated public canalising of Covid vaccines. 

In terms of trends, this would be no different if the price cap on vaccine administration were removed. In fact, if anything, the price cap may actually have boosted private vaccination rates. It would have far worse without the cap (whose actual compliance and enforcement in many areas is itself deeply questionable).

Countering the view on the capacity of state to deliver, different states have demonstrated in the recent vaccine-for-all days the capacity to administer large numbers of doses. As an example, Andhra Pradesh just delivered 1.3 million vaccine doses. As I have blogged earlier, the Indian state, while being weak on many counts, is actually one of the best in doing clearly defined and time-limited tasks like vaccination camps. If sufficient supply becomes available, over 3-4 months, states can conduct large camps and vaccinate everyone.   

Even with the limited supply, states could adopt a two-track policy - have walk-in centres at PHCs and hospitals, and once enough stocks accumulate have sub-centre level camps to cover the remote areas perhaps once or twice a week (depending on stocks).

Unless supply improve dramatically (on which there are positive signs, but purely due to increased public vaccination rates), this will only get worse in the coming weeks as private sector stocks up and demand tapers off, even as governments are forced to go slow on their own vaccination camps due to shortage of doses. At a purely ethical level, this poses very uncomfortable dilemmas.

Update 1 (24.11.2021)

This is a real world illustration of the clear limits associated with the role of private sector in vaccination, 

Private hospitals are sitting on 10 million unused doses, of which 15-20 per cent will expire next month, said Girdhar Gyani, director-general of the Association of Healthcare Providers (India). With around 2 million Covid vaccine doses likely to get wasted in December, leading hospital chains have now started to give it gratis to citizens. Some hospitals, however, say they will review the situation in the middle of January. Apart from private hospitals, states and Union Territories have 219 million unused doses available with them as on November 23, which were distributed by the Centre. This is roughly one-month’s inventory, going by the current rate of vaccination. Private hospitals had gone slow on ordering vaccines since the demand for paid vaccines went down, and have been focusing instead on liquidating available stock.

It's not just after vaccines became free. Even before that, private sector was sitting on slow-moving stocks.