3.2 Vaccines are cost-effective

south AsiA vAccinAtes

3.2 Vaccines are cost-effective

Under reasonable assumptions, the economic benefits of putting shots in the arms of enough people to reach herd immunity (assumed to be 70 percent) greatly exceed the costs involved in purchasing and distributing the vaccines. We present three scenarios for the costs to South Asian governments of vaccinating 70 percent of South Asia’s population by the end of 2022 as developed in Andersen, Andrews, Cain, and Tandon (2021); the costs exclude free vaccines provided through bilateral or multilateral aid.

The assumptions behind these scenarios are the following:

All three scenarios: Thirty percent of the population is vaccinated in 2021, with the cost of vaccinating 20 percent of the population financed by Gavi, the Vaccine Alliance’s official development assistance-funded COVAX mechanism and the government paying for vaccinating 10 percent of the population. The government pays for the vaccination of the remaining 40 percent of the population in 2022. The exercise assumes a $0.89 per dose cost for international delivery and a $1.66 per dose cost for delivering vaccines domestically, consistent with estimates from the COVAX costing and financing working group. It is assumed that 10 percent of the vaccine would be wasted, for example, due to failure to maintain appropriate cold storage conditions or failure to administer the vaccine within a given time period. Wastage rates are likely dependent on vaccine type (different vaccines have different cold chain requirements) and service delivery efficiency.

Scenario 1: The cost to the government of the vaccine to cover the 50 percent of the population that the government is paying for over 2021-22 is $7 per dose, the average portfolio price anticipated by Gavi for doses beyond the initial donorfunded doses. With a two-dose vaccine, this results in a per-person vaccination price (including distribution costs) of $19.10.7 This is the most pessimistic scenario.

Scenario 2: The cost per dose for the 50 percent of the population for whom the government finances the vaccine is differentiated by country. India pays approximately $3 per dose (Serum Institute prices), and Bangladesh, Afghanistan, Maldives, Nepal, and Sri Lanka pay $4-5 each (based on agreements made or likely

7 It appears that the Johnson & Johnson vaccine would be more expensive than any of the vaccines underlying the scenario assumptions, despite being a one-dose vaccine, so it is not included in these estimations.

SOUTH ASIA VACCINATES

to be made with India).8 Given the lack of information on Pakistan’s vaccine procurement arrangements, the Gavi-recommended $7 per dose cost is assumed. For Bhutan, all doses are expected to be provided free of cost from India, so only local delivery costs ($1.66 per dose) will be shouldered by the government. Maldives is receiving 20 percent coverage from COVAX and an added 10 percent coverage from India (requiring only local delivery costs of $1.66 per dose). It only needs to shoulder the full cost (estimated at $4 per dose plus the international and domestic transport costs) for the remaining 40 percent coverage. We view this as the realistic scenario.

Scenario 3: The cost per dose is a maximum of $3 (plus domestic and international transport costs), mirroring vaccine costs in India, resulting in a total of $11.10 per vaccinated person for the vaccines provided beyond the initial 20 percent coverage from COVAX. Exceptions are: (i) Maldives receives 20 percent coverage from COVAX and an additional 10 percent coverage from India; (ii) Bhutan receives all of its doses from India, so only local delivery costs will be considered; and (iii) in India, only local delivery costs are required since the $3 vaccine is manufactured in India (the results for scenarios 2 and 3 are the same for Bhutan and India). This is the most optimistic scenario.

For all countries and scenarios, the economic benefits of vaccinations greatly exceed the costs of purchasing and distributing them (Table 3). Even in the most pessimistic case (Scenario 1), the lowest benefit cost ratio is for Afghanistan (3.46), while all other countries enjoy a benefit-cost ratio that is greater than six. In the most optimistic fact pattern (Scenario 3), even Afghanistan enjoys a benefit-cost ratio of 5.44, and the other countries’ ratios all exceed nine. Overall, these calculations show that under a range of assumptions, vaccination is likely to be a highly cost-effective investment for South Asia. The benefits associated with the vaccine correspond to those calculated in Table 2, using the mean of the ranges presented.

8 As the vaccines are coming from India, the total cost per dose for India includes the cost of domestic distribution ($1.66 per dose), while the cost for the other countries includes both international and domestic distribution costs ($2.55 per dose).