The 7-day average for covid-19 new cases is trailing 3,500. Yesterday’s fresh cases stood at 3,300. In mid-February, the 7-day average was around 1,100. In fact, the second-wave’s peak happened during the first 10 days of December where the highest 7-day average stood at 3,200, lower than the current average of covid-19 weekly cases. It looks like Covid-19 is here to stay.
Arguably, Pakistan will remain vulnerable to new and taller waves until at least 75 percent of the population is inoculated. There are little to no chances that the country will go into a lockdown situation again while adherence to SOPs has mostly become lax since the first lockdown was relaxed across the country. The challenge for mass-vaccination is two-fold. 1) That donations and the budgeted Rs25 billion will not cover the entire population 2) That due to anti-vax propaganda and fears of vaccine side-effects, people will not want to risk getting the vaccine. With regards to the latter, a latest PIDE bulletin authored by Dr Durre Nayab claims that the “initial reluctance to get vaccinated is waning with time”. Dr Nayab argues that as more people are getting vaccinated and giving a positive feedback, it is convincing others to get vaccinated as well. As argued in this space earlier (read more: “The bell tolls for thee”, March 12, 2021), the government needs to fight fake news and misinformation through a strong communication strategy. Dr Nayab believes the edict of the Imam-i-Kabba can be used to dispel rumours on vaccination.
If a large portion of the population does decide to vaccinate, the grave question of how that will be made possible rears its head again. The government has allocated Rs24 billion to purchase different vaccines. So far, the Chinese Sinopharm and Cansino vaccines, UK’s AstraZeneca, and Russia’s Sputnik have been approved. 17 million doses (to cover 8.5 million people) have been secured through COVAX/GAVI which are donated and free. About 1 million doses of Sinopharm were donated as well which were used to vaccinate healthcare workers and people above the age of 60. That drive is still going on. Yesterday, the government’s order of 1 million doses of Sinopharm and 600,000 doses of one-shot Cansino were also approved. These consignments will arrive over the next few days. The initial order was for 7 million doses but supply is severely limited.
As it stands, Pakistan has access to confirmed 19 million doses—which will cover about 9.8 million people. The total population—as highlighted by the aforementioned PIDE note—requiring a vaccine (considering only those above 18 will be vaccinated) is a whopping 137 million people; or 274 million doses—two dose per person. Right now, about 7 percent of the population may be covered.
It is apparent that the government cannot inoculate its population for free, and donations will be hard to come by as demand across the world grows. As a result, private sector players have been allowed to import vaccines and price caps have been instituted. While that raised a lot of hue and cry—and for good reason, Russia’s Sputnik price has been set at Rs8,449 for two doses ($54 for complete inoculation). The actual price of this vaccine is about $10 per dose—or Rs3,120 for two doses. Even if one were to round off that figure as prices and currency rates fluctuate, Pakistani locals will be buying their vaccination for double the price.
It is unclear how much the government is paying for the 1.6 million vaccines purchases from China—an average price of $30 would suggest the government is paying about Rs53 million towards these paltry doses. But Russian and UK’s vaccines are substantially cheaper—AstraZeneca for instance costs between $6-7 per dose (or about Rs936). Accounting for the 19 million doses already secured, Pakistan would need Rs240 billion to purchase AstraZeneca—the cheapest vaccine available. That is 10 times the total amount budgeted by the government. No doubt, the cost would be higher for more expensive vaccines, especially the Chinese ones (Refer to the PIDE bulletin which provides different calculations for the fiscal burden which falls between Rs263 billion to Rs548 billion or 0.5%-1.21% of the GDP).
If supply is available, the private sector will need huge liquidity to vaccinate the population. But it looks like they are set to make good money off of it—as the current price cap ensures that there is a substantial margin to be earned here by pharmaceutical companies (about 50-55% for the entire supply chain). Price ceilings are typically set below equilibrium and it is important to know what that price would be in the Pakistani market. Meanwhile, the question remains: how many families will actually be able to afford the current price capped vaccine?
The government needs to think long and hard before putting a price cap on the vaccines that are imported –carefully considering its current budget of Rs24 billion which will contribute towards the purchase of 15 million doses (covering 7.5 million people) if it buys Russia’s Sputnik, at $10 a pop. Companies can safely earn a profit on the back of volumes if the market is open and competitive while prices for end-users can also rationalize. Price caps may in fact prove to be detrimental, and very easily lead to market failure resulting in unabated black and illegal markets.