Source: Gilead Sciences, via Google Maps

In an unsurprising move, a key European Union advisory panel overwhelmingly voted in favor of the approval of Gilead Sciences (NASDAQ:GILD) newly named, next-generation, hepatitis C drug Harvoni.

The panel's support was expected following impressive results during clinical trials, and their decision sets the stage for Harvoni's fast-approaching official EU go-ahead. Assuming that a green light comes as expected, Gilead's market-dominating leadership in hepatitis C treatment will likely remain intact, protecting billions of dollars in revenue.

Changing the game-changer
Gilead's Sovaldi was the company's first-generation hepatitis C drug, and demand from doctors and patients for the drug has been nothing less than eye-popping.

Over the first six months of this year, Gilead sold more than $5 billion worth of Sovaldi, making it both the fastest drug to reach blockbuster sales status in history and potentially this year's top-selling medicine.

But the shelf life in hepatitis C has become incredibly short as drugmakers rush to create therapies that are easier to take, have fewer side effects, work better, and have shorter treatment periods.

AbbVie, Bristol-Myers, and Merck all have promising hepatitis C drug alternatives closing in on market approval and their programs have enjoyed considerable success during clinical trials, but in the end it may not matter.

That's because Gilead's Harvoni could end up trumping them all thanks to undeniably impressive efficacy -- it cleared the disease in up to 99% of patients -- and its ability to finally discard side-effect-laden peginterferon and ribavirin from hepatitis C drug guidelines forever.

Source: Gilead Sciences

Working better and faster
Sovaldi is in its own right a breakthrough treatment that offered patients with chronic hepatitis C newfound hope.

Gilead acquired the drug in 2011 by spending $11 billion to buy Pharmasset, the drug's developer.

Thanks to its success in mid- and late-stage studies, anticipation for Sovaldi was so high that doctors began warehousing all but the sickest patients up to a year before Sovaldi's approval. And as a result, Sovaldi has been Gilead's most important drug launch in years.

Until now.

Harvoni has the potential to outpace Sovaldi because it should be able to dominate the indication for longer. That's because competitors can't do better than a nearly 100% clearance rate.

Instead, competitors will need to shift their attention to battling over price or shortening treatment periods from 12, to eight, to six, and even four weeks, or less.

Discounting a cure?
Competitors have spent billions ushering along their competing hepatitis C drugs through clinic, making the incentive high for them to recoup some of their sunk costs.

But racing to zero on price has never been a drug industry hallmark, particularly for drugs that can have such a significant and potentially lifesaving outcome.

Regardless, since AbbVie, Bristol-Myers, and Merck's cure rates aren't as high as Harvoni's, it's hard to imagine that doctors will urge patients to use a less effective drug, even if its cheaper.

That will put healthcare payers like insurers in a tough spot. They spend far more money treating late stage liver failure than they do on Sovaldi. And with Gilead likely to price Harvoni at a premium to Sovaldi, but at a discount to off-label combinations like Sovaldi plus Johnson & Johnson's Olysio, payers may struggle to argue against its use.

Rounding out its stable
Sovaldi will continue to see use in certain markets until Harvoni wins approval in them. At that point Sovaldi will pass the baton, but Sovaldi should still maintain a chunk of market share thanks to a recent deal with a slate of generic drugmakers to produce a low-cost version for emerging markets. That means that Gilead is on track to have a formidable one-two punch in treating the 130 million people that have disease worldwide.