The FDA’s New Leaders Can Unleash Innovation

Streamlining effectiveness evaluations à la Operation Warp Speed would unlock trillions in economic value

By By Tomas J. Philipson. Excerpts:

"Cutting a year off the FDA’s decade-long approval process would generate about $10 trillion in economic value, according to a new study"

"speeding up development by one to six years for FDA-approved medical products (small-molecule drugs, biologics and medical devices) would unlock between $10 trillion and $49 trillion in economic value."

"If you are willing to pay $100 to brush your teeth for a year but a toothbrush costs $5, the multiple of consumer gains above price is 20. A substantial base of economic evidence puts this multiple around 15 for medical products, which had aggregated U.S. net sales of about $676 billion in 2024. Multiply these sales by 15 and you get into multiple trillions"

"effectiveness trials that provide evidence on how well medical products work for an imaginary average patient, as opposed to real heterogeneous patients who differ in their assessments of the risks and rewards. This one-size-fits-all clearance applies to products already proven safe."

"The FDA could unleash trillions in value by taking six steps to shorten effectiveness assessments, akin to the methods of Operation Warp Speed during Covid-19."

"Under current procedures, once a product is cleared for safety, the FDA can take up to a decade to establish effectiveness for one particular use of a drug. But it then allows the private sector to judge effectiveness for subsequent off-label uses." 

School Choice Benefits Low-Income Families

Vouchers and scholarships help children from cash-strapped families achieve the American dream

Letter to The WSJ. 

"Mr. Kelly argues that Arizona’s education savings accounts program forces trade-offs in state spending, even though he concedes that ESAs represent only 8% of the state’s education budget. He then criticizes the $50 billion price tag on the federal scholarship tax credit for education. The 2025 federal budget was $7 trillion, making the scholarship program less than 0.75% of federal spending. The idea that these scholarships will result in significant “lost revenue” is ridiculous.

Mr. Kelly laments that when students leave public schools in a choice system, public schools lose money. “Hold harmless” arrangements can blunt the blow of enrollment shifts, but even if such options didn’t exist, what would the senator propose we do? Shouldn’t funding vary with enrollment? Would he propose not increasing funding when enrollment rises? He can’t have it both ways.

Finally, Mr. Kelly links to a story in the Washington Post that associates vouchers with declining enrollments in Arizona. Recent projections from the National Center for Education Statistics predict declining student populations due to birth dearth, not school choice, as we see the largest losses projected in states like California that don’t have choice programs. Even if choice was driving declines in enrollment in public schools, that should be a wake-up call that public schools are only viable with a captive audience.

Michael Q. McShane

EdChoice" 

Expanding 340B Won’t Fix a Broken System

Including community practices in the discount drug program would make a bad problem worse

Letter to The WSJ. 

"Regarding “Is the 340B Discount Drug Program Working?” (Letters, May 13): The American Society of Clinical Oncology’s proposal to expand 340B drug discount program eligibility to community practices will only worsen existing problems with the program.

What began in 1992 as a modest safety-net program intended to help vulnerable patients has evolved into a multibillion-dollar institutional revenue stream that too often benefits hospitals and health systems more than patients.

Expanding participation in a flawed program isn’t reform. It simply broadens access to the same distorted financial incentives that have fueled consolidation, higher costs and migration of cancer care into more expensive hospital settings.

The problem with 340B isn’t that too few institutions can profit from it. It’s that hospitals and covered entities can purchase drugs at steep discounts while receiving reimbursement from commercial payers, often without demonstrating that savings directly reduce costs for financially vulnerable patients.

Discounts should follow patients in need—not institutions. If a patient is uninsured, underinsured or financially vulnerable, the value of the discount should be directly tied to that patient’s care through lower out-of-pocket costs, financial assistance and improved access to treatment. That’s what Congress intended.

Ted Okon and Lucio Gordan, M.D.

Community Oncology Alliance and

Fla. Cancer Specialists & Research Inst." 

The Proxy Advisers Strike Back

ISS and Glass Lewis join New York City in trying to stop Exxon from moving to Texas

WSJ editorial. Excerpts:

"Activists with little stake in companies have abused the shareholder proxy process to drive their environmental, social and governance (ESG) political agenda. This includes resolutions requiring CO2 emission cuts and workforce diversity audits. Plaintiff firms and government pension funds are using shareholder lawsuits to shake down companies.

It’s often less expensive for companies to settle lawsuits than defend against them. One reason is courts in states like Delaware and New Jersey have become unpredictable. Recall how a Delaware judge in 2024 invalidated Tesla CEO Elon Musk’s pay package—which shareholders had twice approved—on the dubious rationale that it violated the state’s “fairness” standard. 

All of this explains why Exxon is joining a parade of companies, including Tesla, Space X, Coinbase and Dillard’s, that have moved their legal homes to Texas."

"Glass Lewis and ISS, which control 90% of the proxy advisory market, also fear their power over companies will wane if activists face a higher burden to bring ESG resolutions."

"Limiting access to the proxy ballot for political activists who don’t have a stake in a company’s long-term success is in the interest of shareholders."

"“substantial portion of the S&P 500 including the majority of Delaware incorporated issuers, maintain exclusive-forum provisions designating a single court for internal affairs litigation.”" 

Pope Leo’s AI Manifesto

His defense of human agency is welcome but not his faith in the state

WSJ editorial. Excerpts:

"When it comes to AI, his encyclical mostly recites the most pessimistic prophecies. He largely dismisses AI’s potential benefits, such as faster and less expensive drug development and medical cures. His call for more government regulation of AI echoes opponents of capitalism like Sen. Bernie Sanders and Rep. Alexandria Ocasio-Cortez."

"We’ve been around a while and don’t recall when anyone relied “solely” on the free market. Western governments now snatch as much as half of GDP and regulate nearly every part of business life."

"Throughout history the diffusion of technology has democratized information and improved living standards, especially for the poor. The internet and social media have enabled people living under repressive regimes to share information"

"He calls for regulation of algorithms that “influence credit distribution, personnel selection or access to services and opportunities” and “measures to ensure equity: taxation, social protection and industrial policies.”"

"government control is likely to result in an even greater concentration of power. Regulation tends to protect incumbents and retard competition." 

Republicans Shill for Solar Subsidies

Tim Pawlenty was against them in 2012. Now he’ll head the industry association

By Isaac Orr and Sarah Montalbano They both work at Always On Energy Research. Excerpts:

"Minnesota’s electricity prices were 18.5% below the national average in 2007, bolstering the state’s energy-intensive industries like agriculture, manufacturing and mining. By 2017, when Minnesota met its 25% renewable mandate eight years early, the state’s all-sectors electricity prices were only 2% below the national average."

"new solar costs [in Indiana] increase from $76.79 a megawatt-hour to $159.24 a megawatt-hour once firming costs to maintain reliability are included. This is without generous federal subsidies."

"the cost for new natural-gas combined-cycle plants is only $65.03."

"In his 2011 presidential campaign, Mr. Pawlenty said that the government needs to get out “of the business of handing out favors and special deals” and allow “the free market, not freebies” to work." 

The Academy Rethinks the SAT

University of California faculty say that when tests were dropped, student learning fell

WSJ editorial. Excerpts:

"in . . . 2020 . . . the University of California . . . [decided to] drop standardized tests as an admissions requirement . . . The experiment has been a failure, as more than 750 professors in STEM disciplines . . . now admit"

"preparation gaps so severe that instructors must reteach middle-school mathematics"

"Test scores “add substantially to UC’s ability to predict student success” beyond high school grades, especially for minority groups, the faculty report said."

"the university “does not appear to use standardized test scores in a way that amplifies racial disparities.” Without test scores, admissions would hinge on inflated grades, extracurricular activities and essays."

"“for three consecutive years, 20-30% of UC Berkeley first-semester calculus students who participated in mathematical diagnostic testing displayed severe preparation deficits.”"

"current admissions standards cannot “reliably distinguish readiness for university-level STEM majors"

[they were] "admitting students to STEM programs “without a reliable measure of whether they are prepared to succeed."

"UC San Diego . . . found one in eight of the school’s freshmen had math skills below high-school level" 

That was "a 30-fold increase since 2020"