Patients with advanced melanoma will be reimbursed for a treatment called Opdualag - a combination of immunotherapies that help the body fight cancer.
Opdualag will be available under the scheme from February 1 - a new listing the federal government says could benefit about 940 patients each year.
Health Minister Mark Butler said without the subsidy, patients could pay about $315,000 per course of treatment.
Melanoma patient Felicity Lloyd knows how expensive treatment can be.
The Adelaide mother was diagnosed with advanced melanoma in 2017.
Ms Lloyd was cleared of cancer after surgeries in 2013 only to discover a lump in her breast four years later.
Tests revealed it had spread throughout her body.
Ms Lloyd required two sets of medication and while both were listed on the PBS, she said the subsidy required they be used in an order that did not best suit her situation.
Fortunately, her family was able to pay for one of the medications and she received compassionate access to another.
Ms Lloyd was cleared of cancer again but continues to undergo some treatment.
She is acutely aware that overcoming cancer can require multiple, costly treatments and welcomed the new addition to the PBS.
"It took multiple treatments for me to achieve no evidence of disease," she said.
"Treatment and access to treatment is improving all the time."
Co-medical director of Melanoma Institute Australia Professor Georgina Long said preventing melanoma remained paramount.
Immunotherapy was changing the approach to treatment of patients with advanced melanoma, Prof Long said, but more needed to be done.
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