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Merck Strikes First in Hep C Drug Battle

WHITEHOUSE STATION, NJ ( TheStreet) -- The U.S. approval Friday of Merck's (MRK - Get Report) hepatitis C drug Victrelis was expected. More surprising was the drug's "best case" label that will help Merck better compete in the new hepatitis C treatment market.

The U.S. Food and Drug Administration approved Victrelis with a broad label that basically gives Merck what it wanted, which is to leave decisions about how best to use the hepatitis C drug in the hands of physicians. The downside for Merck to this broad discretion on Victrelis' label is that doctors may have too many complicated dosing options.

Vertex Pharmaceuticals (VRTX - Get Report) could exploit any confusion caused by Victrelis' label. Vertex's hepatitis C drug Incivek is expected to receive U.S. approval later this month with a more straightforward and easy-to-understand dosing schedule. Vertex's Incivek is also more potent, curing a greater percentage of hepatitis C patients compared to Merck's Victrelis, at least according to the respective clinical trials run by both companies.

The stakes are high in the new hepatitis C treatment market. Approximately 3.2 million Americans are infected with the viral disease that attacks and progressively destroys the liver. Most people infected with hepatitis C don't know they have the disease and aren't diagnosed until liver damage occurs, which can take years.

The old gold-standard treatment regimen for hepatitis C -- 48 weekly injection of interferon and daily doses of oral ribavirin -- cured about 40% of patients. Adding Victrelis to that regimen will shorten treatment duration for some and improve cure rates to more than 60%. Likewise, Vertex's Incivek will also shorten treatment and boost cure rates to as high as 80%.

The looming marketing battle between Merck and Vertex is worth billions of dollars in new hepatitis C drug sales.

For now, at least, Merck has the market to itself -- the prize for being first to approval. Victrelis will cost $1,100 per week, which means patients and insurers will pay between $26,000 and $48,000 for Victrelis, depending on the length of treatment. This price doesn't include the cost of interferon and ribavirin, which adds another $25,000 to $35,000, again, depending on duration of treatment.
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