Patients with advanced skin cancer will soon have affordable access to a promising new immune-based treatment, following its listing on the Pharmaceutical Benefits Scheme.

The Federal Government will invest $57 million to list breakthrough drug Keytruda on the PBS, to improve the lives of more than 1,000 patients.

Health Minister Sussan Ley said the drug currently cost patients $150,000 a year, but they would now pay about $38, or just over $6 for those on concession.

She said the drug had passed through the Therapeutic Goods Administration, and the Pharmaceutical Benefits Advisory Committee and would be available from September, providing an important lifeline to more than 1,100 Australians with melanoma.

"General patients will pay $37.70 a treatment, and concessional patients just $6.10, so by listing a medicine on the PBS we absolutely bring it within the range of affordability for every single Australian," Ms Ley said.

Oncologist Professor Grant McArthur, from the Peter MacCallum Cancer Centre, said Australia had the highest rates of melanoma in the world, and added that the drug was "revolutionary".

"Australians will be amongst the first in the world to get access to this new treatment," he said.

"The listing of Keytruda on the PBS shows us what can happen when everyone works together to get these drugs listed quickly - so that's patients, industry, clinicians, researchers and government - if we work together we can speed up access to cancer drugs."

Cancer treatment celebrated as 'amazing break-through'

Australian businessman and former Melbourne lord mayor Ron Walker, who accessed the drug from the United States under a test scheme, said the treatment saved his life.

"I was a walking person that was going to die, and with this drug I came back to life again within a year, so it's [had] an amazing effect on me and it's having the same effect on others," he said.

"It's an amazing drug, it's a huge step forward and I think that most countries around the world would be applauding what the Australian Government's done for patients.

Breakthrough drug, Keytruda, previously cost patients about $150,000 a year. ( ABC News: Justine Longmore )

"It's an amazing break-through."

Ms Ley said that while every individual responded differently to the treatment, unlike chemotherapy and radiotherapy, Keytruda did not make patients sick.

"Icons like Ron Walker have explained how this drug has made them cancer free, sadly that's not always the case, but what we do know is that new generation drugs increasingly target the individual cells within a tumour, so they allow a person quality of life while they are unwell," she said.

Professor McArthur said the immune-based treatment worked by "unlocking the power of the body's own immune system to attack and reject a cancer".

He said the drug, which is delivered intravenously once every three weeks, was the most "remarkable" he had seen in his career.

"Keytruda is benefiting over 40 per cent of patients with melanoma, with a substantial proportion of patients getting long-term durable responses," he said.

"Sadly advanced melanoma leads to the death of almost 1,500 Australian patients a year, Keytruda is going to change the lives dramatically of many of these patients, with a significant portion of patients we believe becoming longer-term survivors.

"Advanced melanoma is fatal in nearly all patients, so without drugs like Keytruda and other new melanoma drugs, the future for patients is grim - but now it is different."