Pricing of Covid-19 Vaccines

News: Recently, the Supreme Court has asked the government to clarify in its affidavit the basis and rationale for pricing of Covid-19 Vaccines. The court noted that “different manufacturers are quoting different prices”. There are powers under the Drugs Control Act and Patents Act, and this is the time to invoke such powers.

Pricing Mechanism:

  • The Supreme Court flagged the issue of differential pricing for vaccines among States and the Centre and directed the central government to clarify it in an affidavit. To ensure accessibility, the pricing of essential drugs is regulated centrally through The Essential Commodities Act, 1955.
  • Under Section 3 of the Act, the government has enacted the Drugs (Prices Control) Order (DPCO).
  • The DPCO lists over 800 drugs as “essential” in its schedule, and has capped their prices.
  • The capping of prices is done based on a formula that is worked out in each case by the National Pharmaceutical Pricing Authority (NPPA), which was set up in 1997.
  • So, why the government is not regulating price of vaccines through DPCO
  • This is because the regulation through DPCO is not applicable for patented drugs or fixed-dose combination (FDC) drugs. This is why the price of the antiviral drug remdesivir, which is currently in great demand, is not regulated by the government. To bring vaccines or drugs used in the treatment of Covid-19 such as remdesivir under the DPCO policy, an amendment can be brought.

The Patents Act, 1970:

  • This law, which was mentioned by the Supreme Court, has two key provisions that could be potentially invoked to regulate the pricing of the vaccine. Section 100 of the Act gives the central government the power to authorise anyone (a pharma company) to use the invention for the “purposes of the government”.
  • This provision enables the government to license the patents of the vaccine to specific companies to speed up manufacturing and ensure equitable pricing. Under Section 92 of the Act, which deals with compulsory licensing, the government can, without the permission of the patent holder, license the patent under specific circumstances prescribed in the Act.

The Epidemic Diseases Act, 1897:

  • This has been the main legal weapon for the government in dealing with the pandemic. Section 2 of this law gives the government “power to take special measures and prescribe regulations as to dangerous epidemic disease”. The broad, undefined powers under the Act, can be used to take measures to regulate pricing.