Treasurer Josh Frydenberg announced $81.5 million will be spent cutting the cost of one drug from $155,000 a year to just $40 for each script.

About 160 lives could be saved each year through the greater accessibility of Bavencio (avelumab), which is used to treat the rare and aggressive skin cancer metastatic merkel cell carcinoma.

It will be listed on the Pharmaceutical Benefits Scheme from May 1, which means it is subsidised by the government.

"This will save lives and protect lives," Health Minister Greg Hunt told reporters in Canberra on Monday.

The cost of another drug for breast cancer will be cut from $55,000 a year to just $40 a script.

Ibrance (palbociclib) is used to treat breast cancers involving hormone receptor positive tumours.

That is the most common form of the disease and accounts for most of its deaths.

More than 3000 Australians are expected to benefit from its PBS listing.

As the budget - and election - looms, Prime Minister Scott Morrison has stressed the subsidies are a product of the government's economic nous.

"A strong economy, a strong budget, a budget surplus, that only a coalition government can deliver, is what guarantees the essential services you rely on," he said.

Australian Associated Press