What happened?
Merck & Co. (NYSE:MRK) jumped into the next-generation hepatitis C drug game today with the FDA approval of Zepatier for adult patients afflicted with genotypes 1 or 4. Zepatier is a once-daily, fixed-dose combination tablet that can be administered with or without ribavirin. 

Merck's new drug will go head-to-head against Gilead Sciences' (NASDAQ:GILD) hep C franchise composed of Sovaldi and Harvoni, as well as AbbVie's (NYSE:ABBV) hep C offering Viekira Pak.

According to Merck's initial public statements, the company plans on accelerating the drug's commercial uptake by pricing Zepatier at a roughly 30% discount relative to its chief competitors that are already on the market 

Does it matter?
Merck's decision to significantly undercut both AbbVie and Gilead on price could be a game-changer for both companies. After all, Gilead's shareholders were already concerned about slipping hep C revenue this year, as Harvoni and Sovaldi appear to have to hit a plateau in terms of sales volume in recent quarters.

Moreover, AbbVie's Viekira Pak is only now starting to hit its stride following a slower-than-expected commercial launch, generating a healthy $554 million in global sales in the fourth-quarter of 2015. Of course, this is a far cry from the $4.8 billion Gilead pulled in from its hepatitis C drugs in the third quarter of 2015 (the last quarter from which we have data).

Looking ahead, Merck plans on the having the drug in the hands of wholesalers within a matter of weeks, meaning that Zepatier could start impacting AbbVie and Gilead's top-lines to some degree in the first-quarter of 2016. The good news for AbbVie and Gilead's shareholders is that it'll probably take a couple of quarters for Merck to establish the drug's place in the eyes of the major pharmacy benefit managers. As such, AbbVie and Gilead probably won't see a huge drop-off in market share right off the bat, but eventually this hefty price discount is almost certain to take a toll.