The Center’s COVID Arbitration Vaccination Policy forcing States to Compete in the Open Market

A distinguished legal scholar Michael J Sandel starts his book “Justice: What’s the right thing to do?” by negotiating the justice of sellers charging higher prices for essential goods during a natural disaster.

After presenting competing free market and social welfare arguments to support and oppose ‘price rises’ during a disaster, Sandel asks:

“This dilemma highlights one of the great questions of political philosophy: Is a just society trying to promote the virtue of its citizens? Or should the law be neutral towards competitive conceptions of virtue, so that citizens can be free to choose for themselves the best. a way to live? “.

These questions come to mind when discussing the issue of COVID-19 vaccine pricing.

During the surge of the second wave of the COVID-19 pandemic, the Central Government – facing much public outrage and resentment – announced a new vaccine policy on April 19.

In a press release, the Ministry of Health and Family Welfare announced that everyone over the age of 18 will be eligible for the COVID-19 vaccine under the “liberal and fast” phase III vaccination strategy of May 1. Currently, vaccines restricted to the over 45s and frontline workers.

This news generated a lot of positive vibrations among the public, who were searching for panic and anxiety. However, as it is said, the devil lies in the details! Although the headlines and news tickers celebrated the opening of vaccines to everyone over the age of 18, many other aspects of the policy were subject to public scrutiny.

The terms and conditions of the policy can be broken down as follows:

  1. Private vaccine manufacturing does not need to supply the entire vaccine stock to Central Government. They are allowed to sell 50% stock in the open market, while the Center should be given 50%.
  2. State Governments and private players must purchase vaccines from the open market at a price declared in advance by the manufacturers.
  3. Private hospitals can provide vaccination for a “self-imposed vaccination price”, which should be declared transparent.
  4. The vaccines will be for the 18-45 year category through the open market channel. That is, they have to vaccinate from private hospitals or state government agencies.
  5. The Center will distribute its share free of charge to frontline workers, healthcare workers and the over 45s.
  6. The Center has discretion to allocate a portion of its 50% quota to states based on a review of their performance and extent of infection.

The effect of this policy is that dual pricing of vaccines is allowed, and states are forced to compete with private players to acquire vaccines from the open market, while the Center is likely to receive them at a reduced rate.

There will also be three streams of vaccine distribution:

  1. Through the Centre’s channel – free of charge to frontline workers, healthcare workers and those over 45 years of age.
  2. Via the State Government channel – the vaccines acquired by states from the open market (some provinces have announced they will give these vaccines for free).
  3. Via private hospitals / clinics for their own set price, the vaccines they acquire are from the open market.

Yesterday, Serum Institute of India, a private company producing the ‘COVISHIELD’ vaccine, publish that it will sell vaccines to States at Rs 400 per dose and to private entities at Rs 600 per dose. To put this into context, the rate that SII currently supplies to the Center is Rs.150 per dose.

Discrimination against States

It is important to note that “public health” is subject to the state in accordance with Minute 6 of Schedule II of the Second Schedule.

The Center’s power in the edition derives from Minute 29 of the Current List (List III, over which States also have power) which states “Preventing spread from one State to another to infectious or infectious diseases or pests affecting humans, animals and plants “.

Since COVID-19 was declared a “national disaster”, Central Government has been using its extensive powers under the National Disaster Management Act to make various decisions in relation to pandemic control.

It is a different point of discussion as to whether the policy relating to vaccine allocation will fall under the scope of disaster management. As we only have a public statement publicly, it is not yet clear whether this vaccine policy has been applied in exercising powers under the NDMA or using the general executive powers of the Union Ministry of Health.

Be that as it may, it is unquestionable that States and the Center have the same constitutional obligation to protect the health of citizens. As such, there can be no difference between the State Government and the Central Government. Therefore, requiring State Governments to compete in the open market for vaccine procurement, while Center retains a guaranteed quota for itself, is clearly arbitrary and discriminatory.

It should also be noted that the policy provides no guarantee that the United States is available for a vaccine. States must compete with private entities in the open market. So when private players are ready to buy vaccines at Rs 600, is there any guarantee that states will be available at the rate of Rs 400? If a larger portion of the open market pool is diverted to the private entities, would it not mean that the public will have to pay even higher prices for the vaccine? The promise of free vaccines made by some state governments will not happen if they do so do not get an adequate quota of doses.

This policy also puts states in a position to compete with each other for the share of vaccines in the open market. The availability of a vaccine for a person in the 18-45 age group may depend on the ability of its state government to defeat other state governments in the open market. Can citizen health be left to the whims of open market competition, especially during a pandemic? Promoting such interstate competition can lead to regional differences in vaccine availability, undermining the goal of universal vaccination.

Mumbai-based lawyer Murali Neelakantan, who has been actively writing and commenting on the vaccination policy while leading dailies and public platforms, said the violation of equality (Article 14) and the right to health were obvious (Article 21) in this issue. He pointed out that dual pricing in other commodities has only resulted in corruption and black marketing. According to him, dual pricing means the private sector will get more supplies and the government vaccination for the masses will suffer. He also pointed out that the policy was against the Centre’s own policy of one company, one drug, one price. The current policy, he said, will result in multiple charges for different patients as the service provided will add their “service charges”.

Public health expert and epidemiologist Chandrakant Lahariya told the Post that the new policy could lead to an unfair burden on the provinces.

“For all other vaccination efforts – like polio, BCG, etc. – the funds traditionally come from the Center. For COVID-19 vaccination too, the Center should have provided the funding. Now , the strategy announced by the government on Monday will effectively lead to competing states with the private sector, to procure vaccines, and it is quite possible that richer states will win at the expense of less affluent ones. Also, at present, state governments have no experience in dealing and negotiating with manufacturers vaccine. This lack of experience can also create obstacles for them “, he said.

He further said, “When India is in the midst of a pandemic and the Central government has already allocated Rs 35,000 crore for COVID-19 vaccines, it would be wrong to push states in the uncharted territory of vaccine acquisition.”

Article 14 and 21 Offenses

For a classification to be valid under Article 14, it must pass a two-sided test:

(i) should be based on understandable discrimination, which distinguishes those grouped together from those who are excluded; a

(ii) the difference must be logically related to the object the statute seeks to achieve.

Here, there are no tangible differences between the United States and the Center in their duties to protect public health. Both have the same constitutional obligation.

Also, the classification defeats the purpose of universal vaccination. The policy leads to much uncertainty, as discussed above. There is no guarantee that the United States will receive the required doses. If universal vaccination was intended, the policy should have given states a guaranteed share, avoiding dual pricing.

Excluding people under 45 from the Centre’s free vaccine fund also smacks of unreasonable distribution.

The policy has also created uncertainty about the impending second dose of people in the category over 45 years. As per specific reports, private hospitals will no longer offer the Rs 250 option for the second dose of May 1. According to a report in the Economic Times “from May 1, private hospitals will no longer offer the option Rs 250 per injection. Seeking their second dose after May 1 may choose to have the injection injected free of charge at a government center or pay the negotiated price with a vaccine manufacturer at a private facility, provided supplies are available “.

Against this background, the principle of ‘obvious arbitrariness’ also applies. In accordance with Supreme Court precedents, action was taken capricious, irrational and / or lacking an adequate decision principle is “clearly arbitrary”.

The policy can lead to the rejection of vaccines to people, especially those belonging to marginalized and vulnerable sections, leading to the neglect of a right to health and life under Article 21 of the Constitution.

UNESCO has urged that COVID19 vaccines be treated as a global public good to ensure their equitable availability in all countries, and not just to those who offer the highest for these vaccines.

If we address the issue of the public interest angle, complete vaccination is essential for the general welfare of the country. It’s not just a matter of individual choice. Therefore, the vaccine strategy should be devised in such a way as to reduce vaccine hesitation and ensure access for all. Maximizing free access to vaccines is the answer to this.

As written by lawyers Mukund Unny and Radhika Roy at The Indian Express earlier, “if the right to health is a guaranteed fundamental right of an Indian citizen, it is also entitled to a free vaccine as it is a subset of the right to life guaranteed by our Constitution” .

The Supreme Court had recently overturned the policy of the Central Government to deny interest waiver interest during a loan-to-loan moratorium above Rs 2. crores. The Court ruled that the Government policy was to limit waiver of such interest to loans under Rs 2 crores is “arbitrary and discriminatory”, as no justification or reasons were given for making such a distribution. The Court’s conclusion was based on his observation that the hardships faced by the two categories were similar.

If the same principle is applied, this vaccination policy will not pass constitutional agglomeration.

(Manu Sebastian is the Managing Editor of LiveLaw; he can be reached at He tweets at @manuvichar)