High drug prices driven by profits, House panel report finds

Enormous drug company profits are the primary driver of soaring prescription drug prices in America, according to a damning investigation that Democrats on the House Oversight Committee began releasing Wednesday.



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The first two reports in the investigation focus on Celgene and Bristol Myers Squibb’s Revlimid cancer treatment, which saw its price hiked 23 times since 2005, and Teva’s multiple sclerosis drug Copaxone, which went up in price 27 times since 2007.

Those costs have little to do with research and development or industry efforts to help people afford medication, as drug companies often claim, according to the probe.

“It’s true, many of these pharmaceutical industries have come up with lifesaving and pain-relieving medications, but they’re killing us with the prices they charge,” said Rep. Peter Welch (D-Vt.) as the hearings began Wednesday. He added that “uninhibited pricing power has transformed America’s pain into pharma’s profit.”

The top Republican on the committee, Rep. James Comer of Kentucky, called the investigation a partisan attack. “These hearings seem designed simply to vilify and publicly shame pharmaceutical company executives,” Comer said.

Much of the drug industry’s profits come at the expense of taxpayers and the Medicare program, are used to pay generous executive bonuses and are guarded by aggressive lobbying and efforts to block competition, regulation or systemic change in the United States while the rest of the world pays less, the reports say.

“The drug companies are bringing in tens of billions of dollars in revenues, making astronomical profits, and rewarding their executives with lavish compensation packages — all without any apparent limit on what they can charge,” committee chair Rep. Carolyn Maloney (D-N.Y.) wrote in a letter attached to the first two staff reports.

Rep. Elijah Cummings (D-Md.), the former committee chairperson who died last October, had launched the probe more than a year ago. It has since produced more than a million documents. CEOs of Teva Pharmaceutical Industries, Celgene and Bristol Myers Squibb were testifying Wednesday.

Amgen, Mallinckrodt Pharmaceuticals and Novartis were scheduled to appear Thursday.

Celgene CEO Mark Alles verified the accuracy of the documents obtained by the committee but stuck with the standard explanations that the company’s pricing is entirely aboveboard and merited.

“The pricing decisions for our medicines were guided by a set of long-held principles that reflected our commitment to patient access, the value of a medicine to patients in the health care system, the continuous efforts to discover new medicines and new uses for existing medicines and the need for financial flexibility,” Alles said. He said that in 2018 Celgene “committed to full pricing transparency by limiting price increases to no more than once per year,” pegged to Centers for Medicare & Medicaid Services’ projected national health expenditures.

Teva CEO Kåre Schultz demurred from addressing specific questions about much of the report, saying he took over only in 2017, in part to repair a company suffering after its Copaxone patent finally expired.

He also sounded the familiar refrain that prices

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Hillicon Valley: House panel says Intelligence Community not equipped to address Chinese threats

Welcome to Hillicon Valley, The Hill’s newsletter detailing all you need to know about the tech and cyber news from Capitol Hill to Silicon Valley. If you don’t already, be sure to sign up for our newsletter with this LINK.



a person sitting at a table in front of a sign: Hillicon Valley: House panel says Intelligence Community not equipped to address Chinese threats | House approves bill to send cyber resources to state, local governments


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Hillicon Valley: House panel says Intelligence Community not equipped to address Chinese threats | House approves bill to send cyber resources to state, local governments

Welcome! Follow our cyber reporter, Maggie Miller (@magmill95), and tech reporter, Chris Mills Rodrigo (@chrisismills), for more coverage.

THE IC GETS A LESS THAN STELLAR REVIEW: A House committee warned Wednesday that the U.S. intelligence community is not equipped to handle evolving threats from China in the fields of technology and politics.

The House Intelligence Committee detailed its findings in an unclassified summary of a report, approved for release by the panel by voice vote, that delves into the intelligence community’s (IC) capabilities to respond to Chinese threats.

“The United States’ intelligence community has not sufficiently adapted to a changing geopolitical and technological environment increasingly shaped by a rising China and the growing importance of interlocking non-military transnational threats, such as global health, economic security, and climate change,” the committee wrote in its summary.

“Absent a significant realignment of resources, the U.S. government and intelligence community will fail to achieve the outcomes required to enable continued U.S. competition with China on the global stage for decades to come, and to protect the U.S. health and security,” the committee added.

The report said the IC places “insufficient emphasis and focus” on “soft threats,” such as viral pandemics and climate change, and that if the IC did not modernize systems to increase focus on machine learning and artificial intelligence, national security could be undermined.

On the technological front, “China’s continued advancements in cyber and space-based systems also introduce the likelihood of entirely new domains of conflict in the event of a contingency,” which could serve to “extend the battlefield to our political discourse, mobile devices, and the very infrastructure that modern digital communication and communities rely upon,” the lawmakers wrote.

Committee Chairman Adam Schiff (D-Calif.) acknowledged the shortcomings laid bare by the report, saying in a statement that “our nation’s intelligence agencies have a lot of work to do to fully address the challenge posed by China.”

Read more here.

MORE CHINA CONCERNS: The House GOP’s China task force unveiled its full report laying out hundreds of recommendations and legislative suggestions to combat threats posed by the Chinese Communist Party on Wednesday.

The report includes more than 400 policy recommendations to address issues ranging from national security concerns, human rights violations, problems with the supply chain, Beijing’s missteps in its handling of the pandemic and China’s overall expanding influence on the world stage.

The task force – which is made up of 15 GOP lawmakers who sit on 11 different committees – was initially slated to be bipartisan before Democrats ultimately opted out before its launch in May.

Read more here.

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House panel says US intelligence community not equipped to address evolving Chinese threats

A House committee warned Wednesday that the U.S. intelligence community is not equipped to handle evolving threats from China in the fields of technology and politics.

The House Intelligence Committee detailed its findings in an unclassified summary of a report, approved for release by the panel by voice vote, that delves into the intelligence community’s (IC) capabilities to respond to Chinese threats.

“The United States’ intelligence community has not sufficiently adapted to a changing geopolitical and technological environment increasingly shaped by a rising China and the growing importance of interlocking non-military transnational threats, such as global health, economic security, and climate change,” the committee wrote in its summary.

“Absent a significant realignment of resources, the U.S. government and intelligence community will fail to achieve the outcomes required to enable continued U.S. competition with China on the global stage for decades to come, and to protect the U.S. health and security,” the committee added.

The report said the IC places “insufficient emphasis and focus” on “soft threats,” such as viral pandemics and climate change, and that if the IC did not modernize systems to increase focus on machine learning and artificial intelligence, national security could be undermined. 

On the technological front, “China’s continued advancements in cyber and space-based systems also introduce the likelihood of entirely new domains of conflict in the event of a contingency,” which could serve to “extend the battlefield to our political discourse, mobile devices, and the very infrastructure that modern digital communication and communities rely upon,” the lawmakers wrote.

Committee Chairman Adam SchiffAdam Bennett SchiffTrump official releases unverified Russian intel on Clinton previously rejected by Senate panel Schiff subpoenas Homeland Security, charges ‘unlawful obstruction’ Schiff to subpoena top DHS official, alleges whistleblower deposition is being stonewalled MORE (D-Calif.) acknowledged the shortcomings laid bare by the report, saying in a statement that “our nation’s intelligence agencies have a lot of work to do to fully address the challenge posed by China.”

“After 9/11, we reoriented towards a mission to protect the homeland, and were very successful. But after two decades, the IC’s capacity to address hard targets like China has waned,” Schiff said. “Absent a significant and immediate reprioritization and realignment of resources, we will be ill-prepared to compete with China — diplomatically, economically, and militarily — on the global stage for decades to come.”

Committee staff reviewed thousands of assessments and conducted hours of interviews with intelligence community officials in compiling the report, which recommended a series of steps to ensure the IC can keep up with evolving Chinese threats.

Those recommendations include the White House conducting a review of the IC’s budget, the IC prioritizing its training of employees on China-focused issues and the formation of a “bipartisan, bicameral congressional study group” to evaluate if changes need to be made.

“It’s my hope that the Intelligence Community will work hand-in-hand with the congressional oversight committees to make these necessary changes quickly. We should all have the same goal — ensuring the U.S. and its intelligence

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House panel says drugmakers inflated prices to boost profits and reap bonuses

The Democrat-led reports come just weeks before Election Day, and amid efforts by President Donald Trump to show progress on slashing drug costs, one of his 2016 campaign promises.

Neither company immediately responded to requests for comment.

Highlights: Celgene raised the price of cancer medicine Revlimid 22 times since it launched in 2005, more than tripling its price. Those hikes were not necessarily linked with rising costs or innovation: In 2014, for instance, former CEO Mark Alles ordered an emergency price increase so Celgene could meet its quarterly revenue targets.

“I have to consider every legitimate opportunity available to us to improve our Q1 performance,” Alles wrote in an email. He appears before the committee Wednesday along with Bristol CEO Giovanni Caforio.

Bristol continued with another increase after buying Celgene last year. Revlimid now costs more than $16,000 a month.

The panel’s report also details tactics that Teva Pharmaceuticals used to ward off competition, such as introducing new formulations of multiple sclerosis medicine Copaxone and contracting with payers to limit generic substitutions for the blockbuster medicine.

Teva has raised Copaxone’s price 27 times since its launch in 1997, inflating its cost from $10,000 then to nearly $70,000 today. Bonuses for Teva workers soared as well — the committee reports that “lower level employees were aware of the direct link between their compensation and Copaxone’s price and revenue.”

Teva CEO Kåre Schultz testifies for the pharmaceutical company on Sept. 30.

The panel said that other costs, such as rebates that drugmakers pay to pharmacy benefit managers, do not account for the consistently rising drug prices. Manufacturers typically point to these rebates — used to ensure products’ places on insurer formularies — to justify price hikes because a chunk of the cost goes to those payer discounts.

Heart of the pricing debate: Democrats have long pushed for Medicare to directly negotiate prices with drugmakers, a stance that President Donald Trump also took on the 2016 campaign trail. The committee argues that companies are “taking full advantage” of Medicare’s inability under federal law to negotiate.

While Trump abandoned the negotiation plan in office, he has tried and largely failed to advance other measures to cut drug costs. The president this summer announced an ambitious plan to link Medicare payments to lower costs paid abroad — an approach the industry vehemently opposes.

What’s next: Robert Bradway, CEO of Amgen; Mark Trudeau, CEO of Mallinckrodt Pharmaceuticals; and Thomas Kendris, U.S. president of Novartis, testify on Oct. 1.

Amgen makes Enbrel — one of the world’s best-selling autoimmune drugs — and Sensipar, a kidney failure treatment. Both are blockbuster medicines that have seen significant price increases over the past two decades.

Mallinckrodt sells H.P. Acthar Gel, a decades-old inflammation drug that the manufacturer acquired in 2014 after the previous owner, Questcor, raised its price from $40 to $31,000 per vial. Mallinckrodt continues to raise the price.

Novartis manufactures Gleevec, a cancer medicine that saw prices rise more than 395 percent in roughly 15 years.

The House

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House panel approves FAA reform bill after Boeing 737 MAX crashes

WASHINGTON (Reuters) – A U.S. House of Representatives committee on Wednesday unanimously approved bipartisan legislation to reform the Federal Aviation Administration’s aircraft certification process after two fatal Boeing 737 MAX crashes that killed 346 people.

Representative Peter DeFazio, who chairs the Committee on Transportation and Infrastructure, said the House would vote on the sweeping reform measure later this year.

The Boeing Co BA.N 737 MAX has been grounded since March 2019. Among other reforms, the bill requires that an expert panel evaluate Boeing’s safety culture and recommend improvements.

“Those crashes were the inevitable culmination of stunning acts and omissions within Boeing and the (FAA),” DeFazio said at a hearing.

He said the FAA had failed to properly ensure the safety of the 737 MAX, and called aircraft certification “a broken system that broke the public’s trust.”

Boeing and the FAA have declined to comment on the legislation.

The bill would require American aircraft manufacturers to adopt safety management systems and complete system safety assessments for significant design changes, ensure that risk calculations are based on realistic assumptions of pilot response time, and share risk assessments with the FAA.

A report released last week by House Transportation committee Democrats found that the 737 MAX crashes were the “horrific culmination” of failures by Boeing and the FAA and called for urgent reforms.

The House bill would extend airline whistleblower protections to U.S. manufacturing employees, require FAA approval of new workers who are performing delegated certification tasks for the agency, and impose civil penalties on those who interfere with the performance of FAA-authorized duties.

FAA Administrator Steve Dickson is conducting an evaluation flight at the controls of a 737 MAX in Seattle, a key milestone as the U.S. planemaker works to win approval for the aircraft to resume flights.

Reporting by David Shepardson; editing by Jonathan Oatis

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Pentagon Is Clinging to Aging Technologies, House Panel Warns

WASHINGTON — A bipartisan House panel said on Tuesday that artificial intelligence, quantum computing, space and biotechnology were “making traditional battlefields and boundaries increasingly irrelevant” — but that the Pentagon was clinging to aging weapons systems meant for a past era.

The panel’s report, called the “Future of Defense Task Force,” is one of many underway in Congress to grapple with the speed at which the Pentagon is adopting new technologies, often using the rising competition with China in an effort to spur the pace of change.

Most reach a similar conclusion: For all the talk of embracing new technologies, the politics of killing off old weapons systems is so forbidding — often because it involves closing factories or bases, and endangers military jobs in congressional districts — that the efforts falter.

The task force said it was concentrating on the next 30 to 50 years, and concluded that the Defense Department and Congress should be “focused on the needs of the future and not on the political and military-industrial loyalties of the past.”

“We are totally out of time, and here is a bipartisan group — in this environment — saying that this is a race we have to win and that we are currently losing,” said Representative Seth Moulton, Democrat of Massachusetts, who served with the Marine Corps in Iraq and was a co-chairman of the task force. “There is a misalignment of priorities, and diminishing time to make dramatic changes.”

The report calls for the United States to undertake an artificial intelligence effort that uses “the Manhattan Project as a model,” citing the drive in World War II to assemble the nation’s best minds in nuclear physics and weapons to develop the atomic bomb. The task force found that although the Pentagon had been experimenting with artificial intelligence, machine learning and even semiautonomous weapons systems for years, “cultural resistance to its wider adoption remains.”

It recommended that every major military acquisition program “evaluate at least one A.I. or autonomous alternative” before it is funded. It also called for the United States to “lead in the formulation and ratification of a global treaty on artificial intelligence in the vein of the Geneva Conventions,” a step the Trump administration has resisted for cyberweaponry and the broader use of artificial intelligence.

But questions persist about whether such a treaty would prove useful. While nuclear and chemical weapons were largely in the hands of nations, cyberweapons — and artificial intelligence techniques — are in the hands of criminal groups, terrorist groups and teenagers.

Nonetheless, the report’s focus on working with allies and developing global codes of ethics and privacy runs counter to the instincts of the Trump administration, making it more surprising that the Republican members of the task force signed on.

“I think this is a case of pushing for a different path at the Pentagon,” said Representative Jim Banks, Republican of Indiana and a co-chairman of the group.

In an interview, he was careful to avoid criticizing the White

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House Intelligence panel to subpoena DHS over whistleblower

WASHINGTON (AP) — House Intelligence Committee Chairman Adam Schiff said Tuesday he will subpoena the Department of Homeland Security after a department whistleblower wasn’t allowed access to documents and clearance he needs to testify.

Brian Murphy said in a whistleblower complaint earlier this month that he was pressured by more senior officials to suppress facts in intelligence reports about Russian election interference and other matters. Schiff said he will issue two subpoenas to the department for documents and testimony after “unnecessary delay and obstruction” over materials that would allow Murphy to testify to the panel behind closed doors.

Murphy has agreed to tell his story to Congress, but his lawyer has said he cannot appear until he resolves the issues with the department over access to information.

Schiff, D-Calif., said the committee would compel the document production by Oct. 6. The second subpoena would demand that DHS official Joseph Maher, Murphy’s temporary replacement in the Office of Intelligence and Analysis, testify in an open hearing Friday to explain why the department is delaying security clearances to Murphy’s attorneys and failing to produce documents to the committee, as well as to answer questions about Murphy’s complaint.

Schiff said in a statement that the panel “will no longer tolerate the obstruction and attempts to run out the clock by the department.”

Murphy said in the complaint that he was pressured by senior officials to suppress facts in intelligence reports that President Donald Trump might find objectionable, including information about Russian interference in the election and the rising threat posed by white supremacists. The department has denied his allegations.

A former FBI agent and Marine Corps veteran, Murphy also alleged that senior DHS officials pressed him to alter reports so they would reflect administration policy goals. He said he was demoted from his post as principal deputy under secretary in the Office of Intelligence and Analysis for refusing to go along with the changes and for filing confidential internal complaints about the conduct. He remains with the department in a different capacity.

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40 groups call on House panel to investigate Pentagon’s use of coronavirus funds

A coalition of 40 organizations from across the political spectrum is calling for a congressional investigation into how the Pentagon used $1 billion in coronavirus relief funds.

In a letter to the House Select Subcommittee on the Coronavirus Crisis, the groups also urged lawmakers to consider passing a new bill to suspend the Department of Defense’s (DOD) authority to use the funding.

“We believe the Pentagon’s decision-making with these funds, as recently reported, violates congressional intent at minimum, and represents a significant breach of trust with the taxpayers who fund the military’s budget and its emergency spending,” the organizations wrote in the letter, obtained by The Hill ahead of its public release.

The letter was organized by progressive group Win Without War, the right-leaning National Taxpayers Union and the Project on Government Oversight.

“We believe that the select subcommittee should investigate when, how, and why the Pentagon decided that it could use these specific CARES Act funds in contravention of Congressional intent,” the letter said. “Any findings should be shared with the public to the maximum extent practicable. We would also ask that the select subcommittee consider recommending a rescission of DoD’s budget authority for this $1 billion fund in order to ensure Congress’s constitutional spending authority is not being violated.”

A subcommittee spokesperson did not immediately respond to a request for comment on the letter, which comes after a Washington Post report Tuesday detailed how the Pentagon has used most of a $1 billion fund allocated by the CARES Act on defense contractors rather than medical supplies.

The DOD awarded contracts for jet engine parts, body armor and dress uniforms, among other military equipment, which critics argue is in contravention of the CARES Act stipulation that the funds be used to “prevent, prepare for and respond to coronavirus.”

The Pentagon has defended itself, arguing the money was never intended to be restricted to medical supplies, that it kept Congress fully informed of its plans and that helping the defense industrial bases through the pandemic is an appropriate response to the COVID-19 crisis.

“As indicated by recent reporting, there appears to be a misunderstanding by some about what the Coronavirus Aid, Relief, and Economic Security Act (“CARES” Act) did and did not do with respect to the Department of Defense,” chief Pentagon spokesman Jonathan Hoffman said in a seven-paragraph statement Wednesday.

“The CARES Act did not limit — nor did it intend to limit in its language — the use of Defense Production Act (DPA) Title III to only medical resources,” he added. “As part of the efforts to mitigate economic damage, the act allowed monies to be spent to support individuals and industries that had been impacted by COVID. This is exactly what DOD has done.”

While the Post report provided new details on the exact contracts the Pentagon has awarded, the department notified Congress in late May it planned to use $688 million of the funding to shore up the defense industrial base. Several news outlets, including the

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Trump Media Agency Boss Explains Non-Appearance to House Panel

(Bloomberg) — The chief of the agency that oversees the Voice of America and other media organizations told the chairman of a congressional committee that subpoenaed him that he couldn’t appear because of a scheduling conflict.



a large stone building with United States Capitol in the background: The U.S. Capitol in Washington, D.C., U.S., on Wednesday, Sept. 23, 2020.


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The U.S. Capitol in Washington, D.C., U.S., on Wednesday, Sept. 23, 2020.

Michael Pack, who earlier this year took charge of the U.S. Agency for Global Media, had angered both Democrats and Republicans on the Foreign Affairs Committee when he defied the subpoena to testify about changes at the agency.

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In a letter to the panel’s chairman, Eliot Engel, on Wednesday, Pack said he was “disappointed to receive your subpoena” and “eager to testify.” He complained in the letter that the panel’s staff had refused to accept other dates.

“As we have repeatedly explained to the committee, USAGM has become preoccupied with a series of pressing and complex matters necessary to correct over a decade of systemic security failures. In view of these genuine and urgent conflicts, we requested a brief adjournment so that I may appear a few weeks later.”

Earlier: Trump Media Agency Chief to Defy Subpoena, Angering Republicans

He added that he “could not provide complete information concerning the pressing internal matters.”

He was originally scheduled to appear voluntarily on Thursday, and the committee issued the subpoena last week after he withdrew.

Engel, a New York Democrat, said Tuesday that it was Pack who had failed to provide alternative dates or offer an acceptable excuse.

Pack’s withdrawal also drew a strong statement from the committee’s ranking Republican, Representative Michael McCaul of Texas, who called for Pack to testify. In a sharply divided Congress, the bipartisan response was unusual, particularly with regard to pressing a Trump nominee to appear before a committee controlled by Democrats.

McCaul said that since being confirmed by the Senate in June, Pack had placed critical national security programs “in jeopardy” and that he “needs to come before this committee and explain those actions.”

In June, Pack dismissed the heads of four news organizations, including Radio Free Europe, as well as staff and governing board members at the Open Technology Fund, or OTF, an organization that promotes internet freedom abroad and receives grant money from the Agency for Global Media. McCaul was one of the lead authors of a measure that would establish the OTF as an independent grantee of the agency.

Earlier: Trump Nominee to Lead U.S. Media Agency Gets Committee Approval

Pack’s nomination by President Donald Trump drew heated opposition from Senate Democrats, both for his association with former Trump campaign and White House adviser Steve Bannon, but also over unresolved questions about his business dealings while running an nonprofit media organization called the Public Media Lab. The attorney general of the District of Columbia is investigating the organization for unlawful use of funds.

For more articles like this, please visit us at bloomberg.com

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Rep. Bill Pascrell named chair of House oversight panel

Rep. Bill PascrellWilliam (Bill) James PascrellTrump says people ‘in the dark shadows’ are controlling Biden Democrats tear into Trump’s ‘deep state’ tweet: His ‘lies and recklessness’ have ‘killed people’ Two Democrats call for criminal inquiry of postmaster general MORE (D-N.J.) on Tuesday was selected to lead the House Ways and Means Committee’s oversight subcommittee for the remainder of this Congress, succeeding the late Rep. John LewisJohn LewisThe Hill’s Campaign Report: Biden goes on offense Congress must bolster voting rights and invest in the protection of our election system Ginsburg to lie in state in Capitol on Friday MORE (D-Ga.) in the position.

The Democratic members of the Ways and Means Committee chose Pascrell to be chair of the subcommittee, which is tasked with conducting oversight on tax, trade and health issues.

Pascrell said in a statement that it is “an enormous honor and responsibility” to follow Lewis in the position. He also said that as subcommittee chair he plans to focus on investigating the Trump administration.

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“Exposing the public and private corruption left in the wake of the Trump government will take all the labor of cleaning up after the circus leaves town,” Pascrell said. “I’m eager to grab a shovel and get to work.”

Ways and Means Committee Chairman Richard NealRichard Edmund NealRep. Cedric Richmond set to join House Ways and Means Committee Coons beats back progressive Senate primary challenger in Delaware Pelosi: House will stay in session until agreement is reached on coronavirus relief MORE (D-Mass.) said that he has “full confidence that Rep. Pascrell will work tirelessly to ensure the Trump Administration is implementing the laws under Ways and Means’ jurisdiction efficiently and according to congressional intent.” 

Pascrell was first elected to Congress in 1996 and is a longtime member of the Ways and Means Committee. He has been one of the leaders of Democrats’ efforts to obtain President TrumpDonald John TrumpBubba Wallace to be driver of Michael Jordan, Denny Hamlin NASCAR team Graham: GOP will confirm Trump’s Supreme Court nominee before the election Southwest Airlines, unions call for six-month extension of government aid MORE‘s tax returns.

Rep. Cedric RichmondCedric Levon RichmondRep. Cedric Richmond set to join House Ways and Means Committee Biden campaign ratchets up courting of Black voters, specifically Black men Buttigieg, former officials added to Biden’s transition team MORE (D-La.) will fill the opening on the full Ways and Means Committee that occurred following Lewis’s death in July. 

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