Thousands of Australians fighting late-stage renal and lung cancer will soon get easier access to a new miracle drug.

From Tuesday, the federal government will subsidise Opdivo so that patients will pay just $38.80 per treatment, or $6.30 for those with a concession card.

Up to now, patients have had to fork out about $5000 a course - adding up to more than $130,000 per year.

"This drug changes lives and save lives," Health Minister Greg Hunt said on Sunday.

"For patients and their families it provides the precious gift of a full and healthy life."

It's one of the biggest listings ever on the Pharmaceutical Benefits Scheme, costing the government $1.1 billion.

The drug has been credited with saving the life of AFL star Jarryd Roughead among others.

It's a type of immunotherapy that helps make cancer cells more vulnerable to attack by your body's own immune cells.

Unlike conventional treatments such as chemotherapy or radiation, it activates white blood cells that help fight disease so they can attack cancer cells in your body.

The federal government says it is more effective and safer than current therapies and can improve and extend the life of patients.

"The hardest part of this role is to witness families facing the most tragic of medical diagnoses," Mr Hunt said.

"The most uplifting is to see breakthroughs that save lives , transform families and give people real hope - and that's exactly what Opdivo does."

Lung cancer is the leading cause of cancer deaths in Australia, with about 8000 people dying from the disease each year.

Some 3500 new cases of kidney cancer are diagnosed annually, making it the ninth most common cancer in Australia.

Peak bodies Lung Health Australia and Kidney Health Australia both welcomed the drug's listing, saying it could make a significant difference to patients' lives.