Patients will pay less for more than 2000 medicines from next month, with the price of brands treating common conditions to drop by as much as $20 a script.
Health Minister Sussan Ley says some patients with multiple chronic conditions such as osteoporosis and diabetes, could save up to $400 a year on their medicine scripts.
More than 80 per cent of the medicines set to drop in price next month would see a direct saving to some consumers, while the remaining 20 per cent - those priced above the general PBS co-payment - would save taxpayers from dipping into their pockets, according to Ms Ley.
"In addition to saving consumers real money cash in hand, this innovative coalition reform will also save taxpayers nearly $900 million over the next four years by ensuring the Government isn't overpaying for medicines either," Ms Ley said in a statement yesterday.
"It's a win-win for taxpayers and consumers and is another example of the Turnbull Government making medicines more affordable for millions of Australians."
She said the savings from the 2015 PBS sustainability package are already being used to subsidise new breakthrough medicines such as the $150,000 melanoma treatment, Keytruda.
Ms Ley denied Australians had thus far been overcharged for medicines.
"Consumers in Australia can feel reassured that we are getting the best deal," she said.
"Our PBS is sustainable, the growth is going up but steadily, and we can bring the costs down when medicines become generic so it costs less."
The price drops will come into effect from October 1.
With AAP.