Economics of Vaccine Distribution

India’s vaccine distribution programme has been a dumpster fire as of late. While the total number of doses administered stands at a respectable 15.4 crores on 12.7 crore people, but the fully inoculated population is nearly 2.8 crore, a paltry 2% of the population and there is little hope that these stats would rise at the same pace in the next few weeks.

It would be atleast take until late May for Covaxin’s supply to be bolstered and much hyped Sputnik vaccine might take until June to start supplying while the much expected single dose Johnson and Johnson vaccine would atleast until July to start supplying.

It is in this context that the government decided to make the vaccine administration an open-for-all for the adult population from May 1 onwards and it clearly hasn’t started out as well as no state except Gujarat has started vaccinations for the under-45 general public as of today.

While it makes sense to start a Great Leap Forward style inoculation campaign against the backdrop of a COViD strain that has a higher Reproduction rate and is more potent on the younger population, it stops making sense when it is seen that we are already facing vaccine shortages and this move is accompanied with zero immediate increase in the supply of vaccines. If states go through with administering vaccines for the general public without an increase in vaccine supply, it is going to have a very high opportunity cost.

Vaccines are currently being administered through the CoWIN portal where people are supposed to enter their info and book an appointment to be inoculated. Now, this works fine enough when the caseload is stable and enough stocks are available, and both isn’t the case right now.

Currently, the vaccine distribution works more like an Amazon flash sale than something that is supposed to reach everybody. Vaccine stocks are updated at random intervals at random locations without any offline booking which excludes the demographic groups needing this vaccine the most: The old, the sick and the working class while unnecessarily prioritising those who have the time and the resources to refresh the website 24 times a day Persisting with this system will bring us more harm than good in the short and medium run.

Ideally, we want the whole population to be inoculated with equal consideration, but we are way too early to start pushing towards this aim and we are too late to keep the current system which only includes the 45+, those with pre-existing conditions and essential workers. It’s time that the vaccine distribution is remodelled to achieve 2 key objectives: Reduction of hospitalisation and mortality rates while also enabling the functioning of the economy.

An ideal way to achieve this would have been to allow free pricing of vaccines, thereby allowing those who are more willing and needing to be inoculated to do so without a hitch. But this of course runs into problems, one, it’s politically very unpopular and more importantly, it will exclude crucial sections of the population who might not think it’s worthwhile to sacrifice a week’s wages to vaccinate his/her family. This calls for the closest things to pricing which indicates the need of a person to be inoculated: A points-based allocation system.

This system has already has been in usage in 2 cases where price signals are seen as undesirable: Migration and Citizenship. Canada, Australia, New Zealand and the UK is currently using a points-based system to issue visas to migrants and it has been a roaring success in the first 3 nations to attract human capital which complements their national priorities and a good number of countries use a points-based system to give out citizenship too. A similar system is used in centralised allotment to schools and colleges in our country which will make the construction of such a model easier.

A points-based allocation, when implemented with the right kind of weights and criterion, can indicate the need for a good as good as a price signal while controlling for the ability to indicate that need in monetary terms, which is perfect for a situation like this to ensure maximum efficiency in distribution.

A points-based allocation of vaccines would ideally include criterion like age, pre-existing conditions, occupation, details of co-inhabitants, location etc with adequate weights and quantifying which should generate a total score. The applicant can then choose him/herself to apply to any number of distribution centres within a fixed radius and be put in a rank list in every choice until an appointment is made.

While it might be nearly impossible for the vaccine shortage to end in the near term, being smart and strategic about the existing stock can reduce mortality and other complications while facilitating the functioning of the economy thereby saving occupations and livelihoods.