• FDA approves drug that will compete against Gilead, AbbVie
  • Agency says Merck drug is approved for genotypes 1 and 4

Merck & Co. has priced its new hepatitis C drug, just approved by U.S. regulators, at a sharp discount to competing therapies from Gilead Sciences Inc. and AbbVie Inc., a move that could start a new price war in the field.

The U.S. Food and Drug Administration said Thursday that it approved Merck’s single pill, which combines the medications grazoprevir and elbasvir, after granting the drug a priority review in July.

The medication, called Zepatier, has a list price of $54,600 for a 12-week regimen, according to a Merck statement on Thursday. That’s 42 percent lower than Gilead’s Harvoni, which retails at $94,500.

The field for hepatitis C patients has been divided between Gilead and AbbVie, which have locked up arrangements with the leading managers of drug coverage in U.S. health insurance plans, offering discounts to ensure their medications are the first choice. Still, Merck doesn’t foresee trouble attracting patients.

“Assuming we get a decent label, I believe we’ll be able to have real competition versus Gilead,” Adam Schechter, president of global human health, said in an interview months before the FDA acceptance.

Harvoni, Sovaldi

With little competition on the market, Gilead introduced Sovaldi with a wholesale price of $84,000 for a 12-week course and $94,500 for Harvoni, which combines Sovaldi with another drug. Gilead reaped $10.3 billion in sales from Sovaldi alone in 2014, and analysts estimate that Sovaldi and Harvoni together will generate more than $18 billion in 2015 sales. AbbVie’s Viekira Pak was launched at $83,319.

The high price of Gilead’s treatments brought the issue of drug pricing into the spotlight. Merck Chief Executive Officer Ken Frazier has said the emergence of rival products drives down prices over time.

Merck now has to negotiate with pharmacy benefits managers to determine if patients will be covered for the drug. It may have an edge over AbbVie’s cocktail of pills because, like Gilead’s treatment, there’s only a single pill to be taken daily. AbbVie’s regimen is less convenient, with multiple pills taken either once or twice a day.