(Reuters) - Orchard Therapeutics, a unit of Japan's Kyowa Kirin ( KYKOF ), priced its newly approved gene therapy for a rare, life-threatening genetic disease on Wednesday at $4.25 million, making it the most expensive drug in the United States.

The therapy was approved on Monday, in a first for children with a rare disorder called metachromatic leukodystrophy (MLD), which causes damage to the nervous system and is estimated to affect one in every 40,000 individuals in the United States.

Roughly half the patients with a late infantile form of the disease do not live beyond five years from its onset.

The list price reflects "the value the therapy maydeliver to eligible patients and their families, as well the potential long-term impact treatment may have on overall healthcare utilization," the company said in a statement.

The list price is not necessarily what a patient pays, and the final cost depends on insurance.

Orchard said the Institute for Clinical and Economic Review, an independent drug pricing watchdog, had determined a health-benefit price benchmark for its treatment at up to $3.94 million.

Australian drugmaker CSL's hemophilia B gene therapy that was priced at $3.5 million in 2022 was the most expensive drug at the time.

Orchard said it was working with commercial and government insurers and other payers on outcome and value-based agreements for coverage of the therapy.

(Reporting by Sneha S K and Manas Mishra in Bengaluru; Editing by Shinjini Ganguli)