F.D.A. Approves a Drug for Late-Stage Pancreatic Cancer

In a clinical trial, Abraxane prolonged the lives of patients by a little less than two months on average. Pancreatic specialists have said the drug was a welcome, if modest, advance against a disease that is extremely tough to treat.

“Patients with pancreatic cancer are often diagnosed after the cancer has advanced and cannot be surgically removed,” Dr. Richard Pazdur, director of cancer drugs for the F.D.A., said in a statement on Friday. “In these situations, and in situations where the cancer has progressed following surgery, options like Abraxane can help prolong a patient’s life.”

There will be about 45,000 new cases of pancreatic cancer diagnosed in the United States this year and about 38,000 deaths, making it the fourth-leading cause of cancer death.

Patients with metastatic pancreatic cancer typically live only half a year. For years, researchers have tried to improve that by adding drugs to the standard treatment, gemcitabine, but without notable success.

Abraxane did provide a statistically significant improvement in survival. In its main clinical trial, patients who received Abraxane and gemcitabine lived a median of 8.5 months, compared to 6.7 months for those receiving only gemcitabine.

Abraxane will compete with Folfirinox, a combination of four generic drugs. Folfirinox appears to extend survival by a greater amount than Abraxane, but doctors say it is harder to tolerate and administer.

Abraxane is a novel form of paclitaxel, also known by the brand name Taxol. In Abraxane, the paclitaxel is bound in tiny particles to albumin, a human protein. That is said to enhance delivery of the drug to the tumor and reduce side effects.

Still, Abraxane can depress levels of white blood cells and platelets and raise the risk of bacterial bloodstream infections and lung inflammation, the F.D.A. said.

Abraxane was approved to treat breast cancer in 2005 and lung cancer in 2012. Sales last year were $427 million. Celgene’s total revenue that year was $5.5 billion, mostly from the multiple myeloma drug Revlimid.

Geoffrey Meacham, a biotechnology analyst at J. P. Morgan, said in a note on Friday that he expected Abraxane to “rapidly become the standard of care” for pancreatic cancer. He said sales for that use could eventually exceed $750 million annually.

Celgene said the drug would cost $6,000 to $8,000 a month.

Abraxane was developed by Abraxis BioScience, which Celgene acquired in 2010 for $2.9 billion, in addition to a security entitling holders to possible future payments. With Friday’s approval, Celgene will pay $300 million to those holders.

F.D.A. Approves a Drug for Hot Flashes

The first nonhormonal drug to treat hot flashes won approval from the Food and Drug Administration on Friday, offering a new alternative to menopausal women.

The move was surprising because an advisory committee to the F.D.A. voted 10 to 4 in March against approval.

The treatment, which will be called Brisdelle, was developed by Noven Pharmaceuticals and consists of a low dose of paroxetine, which is used at higher doses in the antidepressant Paxil.

Approved treatments for menopausal hot flashes until now have all contained the hormone estrogen, sometimes in combination with progestin. But hormone use has decreased sharply since a study in 2002 suggested that the combination of estrogen and progestin could increase the risk of cardiovascular problems and cancer.

“There are a significant number of women who suffer from hot flashes associated with menopause and who cannot or do not want to use hormonal treatments,” Dr. Hylton V. Joffe, director of the F.D.A’s division of bone, reproductive and urologic products, said in a statement.

While the F.D.A. does not have to follow the recommendations of its advisory panels, it is highly unusual for it to approve a drug that receives a strong negative vote. Committee members who voted against it said while there was a need for a nonhormonal therapy, Noven’s candidate was only minimally effective.

The agency did not explain why it went against the panel’s recommendation, saying only that it viewed Brisdelle as a useful treatment that had met its goals in clinical trials.

Women in the clinical trials for Brisdelle started out with a median of about 10 hot flash episodes a day. After 12 weeks, those who took the drug had a median of nearly six fewer episodes a day, compared with a reduction of four or five episodes a day for those receiving the placebo.

While the difference was statistically significant, many members of the advisory committee said such a difference would not be meaningful to women.

Noven, which is based in Miami and is a subsidiary of Hisamitsu Pharmaceutical of Japan, said Brisdelle would be available in November. It did not say how much the drug would cost.

Dr. Joel Lippman, chief medical officer of Noven, said in a statement that 24 million women in the United States had moderate to severe hot flashes and that two-thirds of them were not currently treating them.

Brisdelle’s label has a strong warning that the drug can increase suicidal thoughts or behavior, language similar to that on the labels of other drugs containing paroxetine. Other warnings include an increased risk of bleeding, and possible reduction in the effectiveness of the breast cancer drug tamoxifen if both drugs are used together.

The advisory panel in March gave an even stronger no vote to another proposed nonhormonal treatment for hot flashes, an extended-release version of the neurology drug gabapentin. In that case, the F.D.A. went along with the panel, rejecting the drug, according to an announcement by its developer, Depomed.

F.D.A. Approves Merck’s Combination Drug to Reduce Cholesterol

The drug pairs Merck’s Zetia, which lowers low-density lipoprotein (LDL or “bad cholesterol”) with the generic version of Lipitor, the best-selling statin made by Pfizer that lost its patent protection in 2011.

Although the combination drug, to be called Liptruzet, was shown in a clinical trial to reduce LDL cholesterol more than patients who took Lipitor alone, the company said Liptruzet did not reduce patients’ chances of developing heart disease. That fact troubled some cardiologists, who questioned why it was approved.

“This is extremely surprising and disturbing,” said Dr. Steven E. Nissen, chairman of the department of cardiovascular medicine at the Cleveland Clinic.

Cardiologists have long questioned the value of Zetia and Vytorin, which combined Zetia with an older statin, Zocor. They had been on the market for a decade, but had not been shown to reduce the risk of heart disease.

A clinical trial of more than 18,000 patients is assessing whether Vytorin significantly reduces heart attacks, strokes and heart-related deaths and is expected to conclude in 2014. In March, an independent monitoring board let the trial continue, suggesting that no significant safety concerns had come up. Still, Dr. Nissen said he was skeptical that the trial would show that the drugs were effective.

Morgan Liscinsky, an F.D.A. spokeswoman, said high levels of LDL cholesterol were a known risk factor for heart disease. “Liptruzet is a combination of two currently marketed drugs that effectively lower elevated levels of LDL cholesterol,” she said. The F.D.A. rejected Merck’s application for the drug last year, and the company said at the time that the agency requested more information.

Merck said Liptruzet was a good option for patients who were not successful in lowering their bad cholesterol. “A significant percentage of patients are unable to lower their LDL cholesterol to recommended levels despite treatment,” Dr. Peter H. Jones, an adviser to Merck and an associate professor of medicine at Baylor College of Medicine, said in a news release.

Liptruzet is meant to be taken once a day and will be sold in doses of 10 milligrams of Zetia, in addition to 10, 20, 40 or 80 milligrams of Lipitor, known as atorvastatin. Merck’s list price will be $5.50 a pill. A company spokeswoman did not say whether insurance companies were planning to cover the drug, but said Merck “intends to be competitive in managed care to ensure wide access to Liptruzet.”

Sales of Vytorin and Zetia have fallen since 2007, when they brought in a combined $5 billion, but they are still among Merck’s top-selling drugs. In 2012, Zetia brought in $2.6 billion and Vytorin $1.8 billion, according to company filings.

F.D.A. Approves Raptor Drug for Form of Cystinosis

Reluctant to say it aloud, Natalie Stack wrote her 12th birthday wish on a restaurant napkin: “To have my disease go away forever.”

A decade later, her wish is a step closer to being realized.

On Tuesday, the Food and Drug Administration approved a new drug developed with early financing from a foundation that Natalie’s parents established in response to that plea. The drug, which will be sold by the Raptor Pharmaceutical Corporation under the name Procysbi, is for nephropathic cystinosis, an extremely rare inherited disease that, if untreated, typically destroys the kidneys by age 10 and even with a kidney transplant can lead to death by early adulthood.

The story behind Procysbi’s development is yet another example of the important role that determined parents and disease foundations can play in supporting drug development, particularly for rare diseases.

But Procysbi’s approval could also raise troubling questions about whether society can afford to pay extremely high prices for drugs that treat rare diseases. That is because Procysbi is not a new chemical entity, but rather a more convenient and more tolerable version of an existing drug. The existing drug costs about $8,000 a year, whereas Procysbi will cost $250,000 on average.

High prices are typical for drugs to treat so-called orphan diseases. The health care system has tolerated that because, given the small numbers of patients, the overall cost is not that high. But as the orphan drug business model becomes increasingly popular among pharmaceutical companies, the collective cost of the drugs is beginning to mount.

The market research firm EvaluatePharma recently predicted that orphan drugs will constitute 15.9 percent of spending on prescription drugs by 2018, up from 5.1 percent in 1998. And a survey of 50 insurers and pharmacy benefit managers by J. P. Morgan found that drugs for rare diseases would be one of the areas increasingly subject to scrutiny and possible restrictions on use.

While many medicines are unpleasant to take, the existing drug for cystinosis — Cystagon, from Mylan Inc. — literally stinks. It has a strong rotten-egg smell that causes bad breath and body odor. It also causes nausea, vomiting and other abdominal problems. Moreover, it must be taken every six hours, which means patients have to get up in the middle of the night, or their parents must wake them.

Procysbi has the same ingredient as Cystagon but consists of enteric-coated spheres for delayed release. It can be taken every 12 hours instead of every six. The gastrointestinal side effect, halitosis and body odor, are reduced, though not eliminated, according to the parents of children with the disease.

Christopher M. Starr, co-founder and chief executive of Raptor, said he expected it would take time to persuade insurers to bear the extra cost.

“I get it,” he said. “It seems trivial when you first look at this.” He said doubters would think: “You’re dying of a disease. Take it every six hours if that is what you need to do.”

But Dr. Starr argued that the “subtle advantages” of Procysbi “add up to a significant benefit.” He said as many as 80 percent of patients skip doses of Cystagon, which studies have shown can lead to more rapid deterioration of the kidneys, eyes and other organs. The more tolerable Procysbi should allow people to better take their medicines.

Dr. Starr said the price reflected the value of the drug and the need to recoup Raptor’s development costs. The company’s regulatory filings show it has spent $37.4 million on research and development of the cystinosis drug from the company’s inception in 2005 through the end of 2012. Total corporate expenses in that period were $110 million.

Procysbi is the first drug approved for Raptor, which is based in Novato, Calif. Analysts expect sales could exceed $100 million annually. Shares of Raptor closed at $6.90 Tuesday, up 5 percent.

Procysbi treats a very rare disease. Only about 500 people in the United States, and 3,000 worldwide, are estimated to have cystinosis, according to the F.D.A. The disease is characterized by a buildup in cells of the amino acid cystine. The buildup damages the kidneys and eyes and eventually the thyroid gland, muscles and other organs.

Procysbi works by breaking down cystine. Its active ingredient is cysteamine, the same as in Cystagon. Cysteamine was first shown to work in the 1970s by a team led by Dr. Jerry A. Schneider at the University of California, San Diego. The F.D.A. approved Cystagon in 1994.

Business Briefing | Legal/regulatory: Judge Approves Bank of America Settlement

Bee colonies have been dying in increasing numbers, and the latest suspect is a pesticide used to protect agricultural seeds.

It appears that cable TV may be in the early stages of a transition.

DealBook: Judge Approves Sale of Rights to Hostess Brands, Including Twinkies

Scott Olson/Getty Images

A federal bankruptcy judge on Tuesday approved the sales of several major Hostess Brands product lines, including Twinkies, fetching about $800 million for the various pieces of the bankrupt baking company and clearing the way for it to be eventually wound down.

Chief among the deals cleared was the $410 million sale of Hostess’s snack cake brands, including Twinkies and Ho Hos, to Apollo Global Management and Metropoulos & Company. That transaction could lead to the return of the cream-filled treats to store shelves as soon as this summer.

Also approved were the sales of most of Hostess’s bread brands, including Wonder Bread, to Flowers Foods for about $360 million. Grupo Bimbo of Mexico won control of the Beefsteak bread line for $31.9 million after beating Flowers in an auction.

No rival bidders emerged for the snack cakes or the other bread products.

Judge Robert D. Drain of the Federal Bankruptcy Court for the Southern District of New York gave swift approval of the sales, before moving onto more prosaic matters like the review of fee payments to Hostess advisers.

Hostess is also set to sell its Drakes line of snack cakes to McKee Foods, which bid $27.5 million.

F.D.A. Approves Sirturo, a New Tuberculosis Drug

The drug, to be called Sirturo, was discovered by scientists at Janssen, the pharmaceuticals unit of Johnson & Johnson, and is the first in a new class of drugs that aims to treat the drug-resistant strain of the disease.

Tuberculosis is a highly infectious disease that is transmitted through the air and usually affects the lungs but can also affect other parts of the body, including the brain and kidneys. It is considered one of the world’s most serious public health threats. Although rare in the United States, multidrug-resistant tuberculosis is a growing problem elsewhere in the world, especially in poorer countries. About 12 million people worldwide had tuberculosis in 2011, according to Johnson & Johnson, and about 630,000 had multidrug-resistant TB.

A study in September in The Lancet found that almost 44 percent of patients with tuberculosis in countries like Russia, Peru and Thailand showed resistance to at least one second-line drug, or a medicine used after another drug had already failed.

Treating drug-resistant tuberculosis can take years and can cost 200 times as much as treating the ordinary form of the disease

“This is quite a milestone in the story of therapy for TB,” Dr. Paul Stoffels, the chief scientific officer at Johnson & Johnson, said in an interview. He said the approval was the first time in 40 years that the agency had approved a drug that attacked tuberculosis in a different way from the current treatments on the market. Sirturo works by inhibiting an enzyme needed by the tuberculosis bacteria to replicate and spread throughout the body.

Sirturo, also known as bedaquiline, would be used on top of the standard treatment, which is a combination of several drugs. Patients with drug-resistant tuberculosis often must be treated for 18 to 24 months.

Even as it announced the approval, however, the F.D.A. also issued some words of caution.

“Multidrug-resistant tuberculosis poses a serious health threat throughout the world, and Sirturo provides much-needed treatment for patients who have don’t have other therapeutic options available,” Edward Cox, director of the office of antimicrobial products in the F.D.A.’s center for drug evaluation and research, said in a statement. “However, because the drug also carries some significant risks, doctors should make sure they use it appropriately and only in patients who don’t have other treatment options.”

The consumer advocacy group Public Citizen opposed approval in a letter to the F.D.A. in mid-December, saying that the results of a limited clinical trial showed that patients using bedaquiline were five times as likely to die than those on the standard drug regimen to treat the disease.

“Given that bedaquiline belongs to an entirely new class of drugs, it is entirely feasible that death in some cases was due to some unmeasured toxicity of the drug,” the letter said.

Sirturo carries a so-called black box warning for patients and health care professionals that the drug can affect the heart’s electrical activity, which could lead to an abnormal and potentially fatal heart rhythm. The warning also notes deaths in patients treated with Sirturo. Nine patients who received Sirturo died compared with two patients who received a placebo. Five of the deaths in the Sirturo group and all of the deaths in the placebo arm seemed to be related to tuberculosis, but no consistent reason for the deaths in the remaining Sirturo-treated patients could be identified.

Doctors Without Borders and the Bill and Melinda Gates Foundation, both active in the fight against tuberculosis and other global diseases, applauded the F.D.A.’s decision.

Jan Gheuens, interim director of the TB Program for the Gates Foundation, called it a “long-awaited event” and said the fight against TB had not benefited from new drugs in the way H.I.V. had. Beyond the benefits of the drug itself, he said the quick approval process could be a model for other drugs sorely needed in the developing world.

He also suggested, however, that more trials should be conducted to get a better understanding of the side effects that led to the black box warning.

The F.D.A. approved bedaquiline under an accelerated program that allows the agency to conditionally approve drugs that are viewed as filling unmet medical needs with less than the usual evidence that they work. The drug’s approval was based on studies that showed it killed bacteria more quickly than a control group taking the standard regimen, but it did not measure whether in the end patients actually fared better on bedaquiline. Johnson & Johnson will conduct larger clinical trials to investigate whether the drug performs as predicted.

In a statement responding to Public Citizen’s letter, a spokeswoman for Johnson & Johnson said the company was committed to supporting appropriate use of Sirturo and would “work to ensure Sirturo is used only where treatment alternatives are not available.”

Dr. Stoffels said the hope was that other new tuberculosis drugs would also be approved that, when used in combination with bedaquiline, could shorten and simplify the current standard of treatment. “That is still a long time away,” he acknowledged, but “this is a first step in a new regimen for TB.”

DealBook: Judge Approves Hostess Brands' Plan to Close Down

David Pardo/Daily Press, via Associated PressThe doors shut on a Hostess Bakery outlet store in Victorville, Calif., last week.

A federal bankruptcy judge on Wednesday approved plans for Hostess Brands to wind down its operations, but there is little doubt that its best-known brand, Twinkies, will live on.

The company, whose corporate ancestors go back 82 years, said it would put Twinkies on the auction block, along with its other famous brands, including Ho Hos, Sno Balls, Ring Dings and Wonder Bread.

In granting the motion by Hostess, Judge Robert D. Drain of the United States Bankruptcy Court for the Southern District of New York said it was important to have a quick and orderly shutdown of the company to prevent the deterioration of its factories and assets.

The company’s chief executive, Gregory F. Rayburn, testified in court that he needed to lay off 15,000 of his 18,500 employees on Wednesday afternoon so that they could begin applying for unemployment benefits as soon as possible. He said such speed was necessary for maximizing the remaining value of the company.

“From this point forward, I need two things to happen,” Mr. Rayburn told the judge. “I need to maximize the value of the estate, and I need to do the best thing for the employees.”

Wednesday’s hearing came after a last-ditch mediation session on Tuesday between Hostess and its bakery workers union. After several hours of talks, the mediation efforts collapsed.

Hostess announced its intention to liquidate last Friday, and since then the company has received expressions of interest for its bakery brands from a wide range of potential buyers. Without naming names, an investment banker for Hostess, Joshua S. Scherer of Perella Weinberg Partners, said in court on Wednesday that they included regional bakeries, national competitors and retail customers along the lines of Wal-Mart Stores and Kroger.

Mr. Scherer added that his firm had plans to contact around 145 financial firms, including private equity shops and liquidators, to gauge their interest.

Investment concerns like Sun Capital Partners and C. Dean Metropoulos & Company, the owner of Pabst Blue Ribbon beer, have already said that they are interested in buying some or all of Hostess’s remains. Sun Capital has said that it would like to buy all of Hostess, not just its brands, hoping to preserve the company and improve its often-tense relations with its unions.

Mr. Scherer said that he expected asset sales to reap “significant values,” perhaps more than $1 billion. Hostess had revenue of $2.5 billion in fiscal 2012, and a net loss of $1.1 billion.

Its famous brands have been sold and traded for decades among companies, including I.T.T., Ralston Purina and Continental Baking.

“These products will surely live on in one form or the other — because these brands are about as indestructible as Hostess’s baked goods are,” said Jeffrey A. Sonnenfeld, senior associate dean for executive programs at the Yale School of Management.

Hostess was unable to resuscitate itself during this bankruptcy, its second in less than a decade. When it filed for bankruptcy last January, it had nearly $1 billion in debt as well as labor costs and work rules that it insisted were unsustainable.

According to Mr. Raymond, what sent the company into bankruptcy was both the refusal of one of its largest unions, the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, to accept far-reaching concessions and a strike that the union began on Nov. 9, crippling two-thirds of the company’s 33 bakeries.

The bakery workers union, with 5,600 workers at Hostess, repeatedly said that it saw no reason to grant a new round of givebacks — after having granted major concessions in the previous bankruptcy of Hostess — because it was convinced that Hostess was heading toward liquidation, with or without concessions. That union and Hostess’s other major union, the Teamsters, repeatedly asserted that the company was mismanaged, having had six different chief executives since 2002. The unions maintained that Hostess’s top management had done little to modernize the company’s aging bakeries or its sugary product offerings — in an era when the nation has grown increasingly health conscious.

After filing for bankruptcy protection in January, Hostess demanded lower-cost contracts from the Teamsters, whose workers at Hostess average about $20 an hour, and the bakery workers, who average about $16. To help the company survive, the Teamsters, with 6,700 members at Hostess, most of them drivers, reluctantly agreed to a contract with numerous concessions. They include new work rules, an immediate 8 percent pay cut, a 17 percent reduction in Hostess’s contribution toward health coverage and a suspension of its pension payments until 2015. In return, the company agreed to give its unions two of the nine seats on its board and a 25 percent stake in the company.

But the bakery workers’ union resisted a similar deal, convinced it would drive down wages in the industry while in no way guaranteeing Hostess’s survival. That union went on strike rather than accept that offer, hoping the company would bend.

A week after the strike began, Mr. Rayburn said he would liquidate the company.

The looming liquidation of Hostess has been a topic of debate, with many on one side criticizing greedy, stubborn labor unions and many on the other blaming what the bakery workers’ president has called “vulture capitalists.” The company entered its first bankruptcy in 2004 with $450 million in debt, and exited five years later with even more debt — $670 million.

“The private equity owners put this thing in such deep debt and asked for such deep concessions that it put the unions in a difficult situation,” said Thomas A. Kochan, a professor at the Sloan School of Management at the Massachusetts Institute of Technology. “The unions weren’t sure whether these concessions would be enough to salvage the company.”

Hostess Brands has corporate roots going back to 1930, but the company has had that name only since 2009, when Ripplewood Holdings, the private equity firm that took control of Interstate Bakeries, renamed it. Ripplewood, which has close ties to Richard A. Gephardt, a former Democratic House majority leader and longtime ally of labor unions, is rarely viewed as a predatory private equity company — it originally bought Hostess as part of an effort to save distressed unionized companies.

“The company had plenty of time to figure out a new business model in terms of products, but it didn’t, so it was convenient to blame labor for the company’s failure,” said John W. Budd, a professor of industrial relations at the Carlson School of Management at the University of Minnesota. “Hostess’s creditors weren’t willing to make any more concessions, so if they didn’t see a viable business model, that raises questions of why labor should be making more concessions.”

BP Board Approves Rosneft Deal

Under the terms of the deal, BP would remain in Russia but — initially at least — only as a minority investor in an oil company controlled by the government of President Vladimir V. Putin. Later, BP is hoping to use this new strategic tie with the Kremlin to drum up other business.

BP had been telegraphing its willingness to make a deal for some time, and Rosneft formally submitted an offer on Thursday to buy out BP’s 50 percent of a joint venture here called TNK-BP.

The board’s authorization allowed BP’s chief executive, Robert W. Dudley, to negotiate the final terms for BP’s sale of its Russian holdings within a range of acceptable combinations of cash and shares, the executive with knowledge of the decision said.

The ranges were $10 billion to $14 billion and 15 to 20 percent of Rosneft’s shares. BP is likely to receive at least one seat on the board.

A formal announcement is expected as early as Monday. BP’s stock rose about 4 percent last week when it became clear that a deal was imminent.

For BP, the sale comes as the biggest step yet in Mr. Dudley’s “shrink to grow” strategy in the wake of the 2010 Gulf of Mexico oil spill.

Mr. Dudley, a Mississippian, took over in the midst of that disaster and decided that BP, to survive, should put its global business on a new footing by selling older, less profitable fields and concentrating on exploration.

BP sold assets in countries from Venezuela to Vietnam. The Russian holdings were the largest that fit the category for potential sales, comprising mostly aging oil fields in Siberia with little potential for new output.

Still, they account for about 25 percent of BP’s global production, or about as much oil as BP pumps in the United States, including Alaska. For the Russian industry, the buyout of BP’s share in TNK-BP takes a large swath of the industry full circle back to state ownership. Rosneft’s chief executive, Igor I. Sechin, a former military intelligence officer and close aide to Mr. Putin, is a proponent of greater state ownership in the oil industry.

TNK-BP is the third-largest Russian oil company; if Rosneft buys out both BP and the handful of Russian billionaires who control the other half of TNK-BP, Rosneft will become the world’s largest publicly traded oil company, with production of about 4.5 million barrels a day.

“We have seen this remarkable strengthening of the influence of Rosneft and Sechin personally,” John Lough, a former TNK-BP official who is a Russia specialist at Chatham House, a British research organization, said in an interview.

“At the moment, the way the Russian system works is by achieving a distribution of influence and access to rents” — or windfall profits — “to achieve overall equilibrium on which the state is based,” he said. “Sechin’s apparent strengthening of influence could come at the cost of maintaining that balance. It could upset the apple cart.”

For Mr. Putin, this represents a milestone in the consolidation of the Russian oil industry.

Oil and natural gas contribute about 50 percent of the federal budget and 60 percent of export revenues. For most of Mr. Putin’s tenure, oil has been his ticket.

During Mr. Putin’s re-election campaign last winter, for example, the government was able to ladle out oil-revenue-based raises in public sector wages. Many soldier salaries doubled in January.

In addition to taxes, the government extracts profits from the dividends the majority state owned energy companies Gazprom and Rosneft pay. If Rosneft buys out both BP and the Russian partners in TNK-BP, the federal government’s share of the oil industry will rise above 50 percent.

When oil prices are around $100 a barrel, the Russian industry and the government together make about $1 billion a day from export sales of oil and natural gas.

Andrew E. Kramer reported from Moscow and Stanley Reed from London.