The Federal Government has fended off criticism over its decision to cut funding for a drug used to treat cancer.

From next month, financial support for the chemotherapy drug Docetaxel will be slashed by 70 per cent.

Liberal senator Ian McDonald has criticised the decision during Question Time, arguing costs could rise sharply for some patients and treatment centres.

"Why is the Government abandoning vulnerable patients in its increasingly desperate bid to return the budget to surplus?" he said.

But outside the Senate, Health Minister Tanya Plibersek said a cheaper, generic version of the drug was available to patients and that the saving would go to fund newer treatment options.

"There has been no budget cut for chemotherapy drugs," she said.

"What it's about is reducing what the Government pays for the old medicines, for medicines that are coming off patent where there are generic medicines available, so that we can spend more on the innovative, new medicines.

"I can tell you, cancer patients won't miss out under this Government."

But Opposition Leader Tony Abbott said cancer patients deserved better.

"It really is disgraceful that a cash-strapped government, which is spending money hand over fist on things that should not be happening, like border protection blow-outs, now lacks the money to ensure decent cancer treatment," he said.