Explained: What is indemnity? Why foreign and Indian COVID-19 vaccine-makers insisting on it?


India is facing an acute COVID-19 vaccine shortage and the Centre is trying to secure as much as possible from both domestic as well as international pharma companies.

Explained: What is indemnity? Why foreign and Indian COVID-19 vaccine-makers insisting on it?
As India faces an acute COVID-19 vaccine shortage, the Centre is trying to secure as much as possible from both domestic as well as international pharma companies. As US giants pharma giants Pfizer and Moderna look to export jabs to India, they have sought an immunity clause from the Indian government.
Sources in the Health Ministry suggest that Pfizer and Moderna may get indemnity or legal protection from claims linked to their COVID-19 vaccines. No other vaccine maker in India has this immunity yet. Pfizer has said it will export to India only when it has legal protection.
Serum Institute of India (SII), the India-based company producing the Oxford-AstraZeneca vaccine, known as Covishield here, has also sought legal protection from any claims linked to the use of its COVID-19 vaccines.
All vaccine makers, whether Indian or foreign, should be granted the same protection, the Adar Poonawalla-led company has reportedly told the government.
What is indemnity?
Indemnity means security against a loss or other financial stress. In legal terms, indemnity means a contractual obligation of one party to compensate another party due to the acts of the former. The clause is commonly used in insurance contracts.
Why are Pfizer and Moderna seeking indemnity?
If the vaccine makers get indemnity, they cannot be sued in India. They will become immune to any monetary or other claims filed in India with respect to their jabs
This will also make vaccines more affordable and help keep the prices low as the manufacturers won’t have to worry about insurance or claims-compensation-related elements.
The global market for COVID-19 vaccines is a seller’s market. Very few citizen claims are entertained. Even in the United States, people can’t sue the U.S. FDA (Food & Drug Administration) for approving or disapproving a drug.
Do vaccine makers have legal protection in other countries?
Pfizer has obtained indemnity in countries where its vaccines are already in use, including the UK and the US. In December 2020, a federal court in the US granted Pfizer and Moderna immunity from liability. They cannot be sued for compensation if there are any adverse effects from the shot.
Will India grant indemnity to foreign vaccine makers?
As companies engage with the government over possible legal protection, a former senior ICMR official has said that no company in India's vaccination history has ever paid indemnity.
Like other countries, the Indian government is expected to grant indemnity to the companies if they apply for Emergency Use Authorisation (EUA).
The government would probably look at rules and practices that have been followed in other countries on granting indemnity coverage.
Experts say that there is a risk-benefit ratio in vaccination and benefits far more outweigh any risks.
However, experts say that if the government grants indemnity to foreign vaccine makers and not to Indian vaccine makers (such as Serum Institute and Bharat Biotech), then it can be accused of discriminatory policy.
What are the benefits of granting indemnity?
Granting indemnity to Pfizer against legal claims would reduce the purchase price of the vaccine for the Indian government since Pfizer and Moderna would no longer have to take the risk of payment of compensation.
As a benchmark, the US has a compensation fund created by a “cess” which ranges between approximately Rs. 55 and Rs. 329 on each vaccine dose that may cost anything from Rs. 876 to Rs. 16,060 per dose.
An indemnity by the Indian government would therefore not cost much and could well get India the vaccines that it desperately needs.
Given the huge global demand for COVID-19 vaccines, if India grants indemnity, it would be able to secure the supply of internationally approved Pfizer and Moderna vaccines quickly.
What happens when a vaccine maker doesn’t get indemnity in India but still wants to sell here?
The vaccine maker will either buy product liability insurance against claims in India and overseas or it will self-insure.

Market Movers

Adani Ports694.35 47.45 7.33
Bajaj Auto4,167.10 113.20 2.79
HUL2,482.90 65.20 2.70
Bharti Airtel538.75 10.10 1.91
Grasim1,480.75 22.55 1.55
HUL2,480.75 63.85 2.64
Bajaj Auto4,164.95 105.95 2.61
Bharti Airtel538.90 10.20 1.93
Bajaj Finserv11,998.00 179.95 1.52
IndusInd Bank994.90 10.65 1.08
Adani Ports694.35 47.45
Bajaj Auto4,167.10 113.20
HUL2,482.90 65.20
Bharti Airtel538.75 10.10
Grasim1,480.75 22.55
HUL2,480.75 63.85
Bajaj Auto4,164.95 105.95
Bharti Airtel538.90 10.20
Bajaj Finserv11,998.00 179.95
IndusInd Bank994.90 10.65


Rupee-100 Yen0.6699-0.0019-0.29