NEW YORK — It's a novel approach in the long battle between brand-name drugs and their generic rivals: Merck & Co. is slashing the price of its cholesterol drug Zocor so low for one insurance plan that members will actually pay less for the original pills than for the generic.

That tactic has some consumer advocates fearing the practice will spark a movement among Big Pharma, compounding other pressures they fear will weaken the generic industry and compromise the country's source of low-cost drugs.

Under the deal, members of UnitedHealth Group Inc. will pay around $10 for a month's supply of brand name Zocor and $40 for a generic after the drug loses patent protection tomorrow. Both Merck and UnitedHealth say the arrangement demonstrates how market competition drives down costs, and that's good for patients.

Consumer advocates typically cheer lower prices, but in this instance, they worry that a short- term benefit for patients will ultimately result in long-term problems. They say moves such as Merck's undermine generic companies' chances to generate the profits that fuel their ability to conduct research and may result in fewer cheap medicines.

Generic companies make most of their profits when awarded six months of market exclusivity because a lack of competition means they don't have to sell their product at an enormous discount to the brand. If the brand chops its price, the generic may be forced to follow suit.

Teva Pharmaceutical Industries Ltd. was widely expected to have six months of exclusivity. With Merck's decision, U.S.-traded shares of the Israeli company plunged $3.40, nearly 10 percent, to close at $32.27 yesterday on the Nasdaq. Shares of New Jersey-based Merck rose 35 cents to $35.27 on the New York Stock Exchange.

Sales of drugs typically shrivel when they face generic competition because the low-cost products are up to 60 percent cheaper than the brand-name medicine. Merck's actions won't necessarily change that because of the drug's low price, even though Zocor may retain more of its market share. Zocor's sales totaled $4.4 billion last year.

A.G. Edwards & Sons Inc. analyst Albert Rauch lowered his revenue projections for Teva's generic Zocor for the second half of this year to $65 million from $385 million and decreased his earnings per share estimate on the company for 2006 to $1.86 from $1.99. However, he also dropped his revenue predictions for Merck's Zocor to $611 million from $664 million in the second half of 2006 and cut his estimate for the company's earnings per share to $2.35 from $2.37.

At the same time, Merrill Lynch & Co. raised its esimate of Teva profits this year to $2.10 a share, up from its previous estimate of $1.91.

Merrill said it wasn't concerned about Merck's agreement with UnitedHealth over Zocor.

Sen. Charles Schumer, D.-N.Y., accused Merck of engaging in predatory pricing and called its actions "a legal bribe." He has asked the Federal Trade Commission to investigate the deal between Merck and UnitedHealth.