LONDON: The Western world's first drug to fix faulty genes promises to transform the lives of patients with an ultra-rare disease that clogs their blood with fat. The only snag is the price.

The gene therapy for lipoprotein lipase deficiency (LPLD), a hereditary disorder that raises the risk of potentially lethal inflammation of the pancreas, is likely to cost more than $1 million per patient when it goes on sale in Europe this summer.

Rare or so-called orphan diseases are winning unprecedented attention from drug developers. More than a quarter of the 39 new medicines approved in the United States last year were designated for such conditions.

These are therefore exciting times for campaigners such as Briton Jill Prawer, who leads an LPLD support group, and others championing the needs of people with equally obscure illnesses.

Naturally, she is delighted by the arrival of the LPLD drug Glybera. "It's brilliant," said Prawer, a 50-year-old mother of three who has suffered all her life from LPLD.

Until now, governments and insurance companies have largely accepted prices that can run into hundreds of thousands of dollars for products that treat orphan diseases. As only a handful of patients need the treatment, the overall cost to health budgets is relatively small.

However, healthcare providers are increasingly having to balance the acute needs of the few against the wider interests of society, within constrained budgets. Scrutiny of the sky-high prices charged for this wave of new drugs is growing.

"More companies are getting into this sector because they've seen the eye-wateringly high prices that can be charged for some of these very rare disease medicines," said Karl Claxton, professor of health economics at the University of York.

"It's unsustainable. Healthcare systems around the world are under increasing financial pressure and all of them are starting to look very carefully at what they get for their money."

As more treatments become available and scientists learn more about what causes the 6,000-7,000 diseases that affect less than 1 percent of the population, there are signs the payers may be pushing back - especially in austerity-hit Europe.

As from this week, a new drug called Kalydeco is being made available on the state health service to about 270 patients in England with a rare form of the lung disease cystic fibrosis.

It was cleared, however, only after Vertex Pharmaceuticals cut the official list price of 182,625 pounds ($297,000) a year. The size of the discount is confidential.

In the Netherlands a row erupted last year over whether the healthcare insurance board, CVZ, should continue funding expensive enzyme replacement therapies for people living with Fabry and Pompe diseases.

In the end CVZ agreed to keep paying but the case highlighted the difficulties of assessing the value of medicines for rare conditions, given the limited evidence that can be collected from clinical trials involving very few patients.

In the case of gene therapy, extreme pricing may be unavoidable, since a single dose could last a lifetime, giving any drug manufacturer just one shot at recouping its investment.

Glybera, developed by private Dutch firm uniQure, is the first gene therapy to win approval in the West, although China cleared one for head and neck cancer in 2003.

Several companies are working on other gene therapies, including Sanofi's Genzyme unit, GlaxoSmithKline , Shire and small biotechs like Bluebird Bio.

On both sides of the Atlantic, drugs for orphan diseases have changed ideas about what makes a profitable pharmaceutical.

Traditionally, drugmakers have relied on mass-market pills to fight problems such as high cholesterol. But expiries of patents, allowing competitors to make cheap copies, have undermined their profits in this area. By contrast, rare diseases offer premium prices and far lower competition.

The U.S. biotech company Alexion Pharmaceuticals shows how well the orphan drug model can work. Despite treating only a few thousand patients worldwide, sales of its rare blood disease drug Soliris are forecast by analysts to reach $1.5 billion this year and $2.6 billion by 2017 - thanks to a U.S. list price of $440,000 per patient a year.

Soliris is not alone. The past decade has been the most productive in the history of orphan drug development, helped by the U.S. Orphan Drug Act in 1983 and similar later laws in Europe, Japan, Australia and Singapore that provide additional market exclusivity for medicines targeting small populations.

While this policy has stimulated innovation, some investors are also nervous about future pricing.

"The issue of the sustainability of orphan drug pricing is really front and centre for investors at the moment," said David Pinniger, investment manager of the International Biotechnology Trust, whose holdings include shares in orphan drug companies such as Alexion and Biomarin Pharmaceutical.

"The question is will the orphan drug strategy become a victim of its own success? With austerity and pricing pressure, this area is going to come under increasing scrutiny."

A Thomson Reuters analysis put the global orphan drug market at more than $50 billion at the end of 2011, with spending accounting for about 6 percent of total drug sales.

A number of these drugs started out as treatments for rare cancers but have since become multibillion-dollar sellers as their use has expanded.

The orphan drug market is expanding faster than traditional pharmaceuticals with annual growth averaging 25.8 percent from 2001 to 2010 compared with 20.1 percent for non-orphan drugs.

Moreover, orphan drugs' average "present value" - which measures the current worth of future revenues - is higher than for non-orphan drugs, despite their tiny target populations. This reflects lower development and marketing costs, as well as longer market exclusivity.

Unsurprisingly, big pharmaceutical firms are showing growing interest in rare diseases, reflected in Sanofi's $20.1 billion purchase of Genzyme in 2011 and decisions by companies including Pfizer and GlaxoSmithKline to enter the market.

That promises more competition in some established areas, with Pfizer, for example, launching its new Gaucher disease drug Elelyso at a 25 percent discount to Genzyme's Cerezyme.

Large drugmakers are also likely to be under more pressure to curb excessive prices than small biotechs - a fact recognised by GSK, which has said it would like to see more responsible orphan drug pricing.

Tim Cox, professor of medicine at the University of Cambridge and the first UK doctor to give Gaucher patients enzyme replacement therapy, welcomes industry investment but believes pricing at present is "completely arbitrary".

"I believe we can have a system to approve drugs for a reasonable time at a reasonable cost that can be reviewed after a period, so that the amount of health benefit gained can be used as an arbiter of the final cost," he said.

That view is echoed by Yann Le Cam, head of the EU-wide orphan disease patients' group Eurordis, who wants to see more flexible licensing that would allow a new drug to come to market earlier with limited distribution while more data is collected.