The Supreme Court on Friday, April 30, 2021 raised eminent questions at the Centre's COVID vaccination policy that allows for both differential pricing between Centre and States and for private companies to set their own prices.
The Court also asked why the Centre was not considering powers of compulsory licensing under the Patents Act over COVID vaccines. The bench comprising Justices DY Chandrachud, L Nageswara Rao and S Ravindra Bhat was hearing the suo moto case in Re Distribution of Essential Supplies and Services and held the following opinions-
"Do not leave the vaccine pricing and distribution to the manufactures, This is equity over public goods. You need to pick up the responsibility for this", said the Court.
"This means leaving it to the vaccine manufacturers to decide which state gets how much? Can this question of equity be left to the private sector?", asked Justice DY Chandrachud.
"4500 crores were funded to the organisation for the development of the vaccine. Then we also own the product!", added Justice Ravindra Bhat.
"The same manufacturer is saying Rs 150 to you and 300-400 to the states! At a bulk level, the price difference will be of 30,000 to 40,000 crores. Why must the nation pay this? This can be used elsewhere! Why can't the central government get in bulk and then the states have it picked up?", the court further remarked.
Justice Bhat also stated that we were the first country to issue compulsory licence in the NATCO case, where a life saving drug was involved (The country's first compulsory licence has been granted by the Indian Patent Office to Hyderabad-based drug-maker NATCO, which allows it to make and sell in India, a similar version of Nexavar, an advanced kidney cancer drug, over which a German pharmaceutical company holds patent) In view of the prevailing national emergency, a case is made out under section 92(3) of the Patents Act (for compulsory licensing). Of course, we do not mean it as a direction, only as an ongoing dialogue.
"States like Germany, Canada and France have all issued compulsory licences in respect of essential drugs. The government can even takeover (the invention) under section 100 of the Patent Act or there can be licensing through the patent controller", continued the court.
"The pricing issue is extraordinarily serious. Today you are saying 50% free of charge to the Centre for people above the age of 45 and the frontline workers. The rest 50%, the state have to negotiate from the private sector for the age group of 18 to 45. We have 59 crore Indians today in that age group. Also, a large segment is under resourced, poor, marginalised, SC,ST. Where will they find the money? We can't follow this private sector model in the times of crisis. Yes we have to incentivise them but we must follow the National Immunisation Programme. How will the private sector know how much to give to Maharashtra or Uttarakhand or Manipur or Gujarat. You can't leave this to the manufacturers. This is equity over public goods. You need to pick up the responsibility for this", Justice Chandrachud told the SG.
"Also, as we open up the vaccination programme to the age group of 18 to 44, knowing the capacity of Bharat Biotech and Serum Institute of India, we need to ramp up the availability of the vaccine. It cannot continue to be from just these two units. You have to use your power so that there are additional units", he said.
Justice Chandrachud flagged the following issues particularly-
"Exercise of powers under section 92 and 100 of the Patents act for compulsorily licensing of the patents in a public emergency"
Furthermore, the bench inquired if the finance ministry has made any previous grants to Bharat Biotech and SII in the past like the current infusion of 1500 and 3000 crores. The bench questioned if the current vaccine prices account for infusion of funds for production infrastructure and other aid provided by the central government and if the central government can indicate the extent of direct and indirect grant/aid that was provided for research development and manufacture of vaccine.
"Why is the central government not buying hundred percent of the doses produced considering the gravity of the pandemic? Will SII and Bharat Biotech come to demonstrate equity in disbursing vaccines between states?", asked the bench.
The bench was of the view that the Centre should clarify its own investment and facilitation for ramping up production by all private manufacturers and clarify if this investment would be reflected in the eventual price that is provided for states and private procurement which can be realistically bargained and set only by the Centre.