European officials have approved the Western world's first gene therapy drug from a small Dutch biotech company, in a milestone for the novel medical technology that fixes faulty genes.

The formal clearance from the European Commission paves the way for a launch next summer of the treatment for an ultra rare genetic disease that will cost around €1.2 million ($1.6 million) per patient, a new record for pricey modern medicines.

After more than 20 years of experiments and a series of disappointments, the EU approval of Glybera, which treats the genetic disorder lipoprotein lipase deficiency (LPLD), is a significant boost for the gene therapy field.

Joern Aldag, chief executive of Amsterdam-based UniQure, said more such treatments would follow and argued a high price was justified because gene therapy restored natural body function and did not just offer a short-term fix.

"This provides higher benefit to patients than the classical protein replacement strategy and this is why we think we should be fairly and adequately compensated," he said in a telephone interview on Friday.

Patients with LPLD, which affects no more than one or two people per million, are unable to handle fat particles in their blood and are at risk of acute and potentially fatal inflammation of the pancreas.

The approval follows a positive recommendation from the European Medicines Agency in July.

The privately owned firm is now working with governments on potential pricing strategies, which are likely to vary from country to country, ahead of the commercial roll-out from the second half of 2013.

Aldag said some countries preferred the idea of a one-off payment at the time of treatment but others were interested in an annuity system, which would probably involve charging around 250,000 euros a year for five years.

That kind of annual charge would put Glybera in a similar price range to expensive enzyme replacement therapies for other rare diseases, such as Cerezyme for Gaucher disease from Sanofi's Genzyme unit.

UniQure is also preparing to apply for regulatory approval for Glybera in the United States, Canada and other markets.

Earlier setbacks

The idea of treating disease by replacing a defective gene with a working copy gained credence in 1990 with the success of the world's first gene therapy clinical tests against a rare condition called severe combined immunodeficiency (SCID).

People with SCID - also known as "bubble boy disease" - cannot cope with infections and usually die in childhood.

The field then suffered a major setback when an Arizona teenager died in a gene therapy experiment in 1999 and two French boys with SCID developed leukaemia in 2002.

In China, Shenzhen SiBiono GeneTech won approval for a gene therapy drug for head and neck cancer in 2003 but no products have been approved until now in Europe or the United States.

More recently, some large pharmaceutical companies have also been exploring gene therapy. GlaxoSmithKline, for example, signed a deal in 2010 with Italian researchers to develop a SCID therapy.