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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 

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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. 

George Budwell has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Gilead Sciences. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.