Drugs costs under budget spotlight

The federal government is fighting on two fronts as it tries to cut about $5 billion from Australia's taxpayer-subsidised medicines scheme over the next five years.

As the the government and pharmacists negotiate a new $15 billion agreement to dispense medications, drug companies are angry about plans to restrict access to new medicines including the latest cancer drugs.

Medicines Australia has written to Prime Minister Tony Abbott asking him to intervene over plans to save $3 billion from the innovative medicines sector, The Australian reported on Thursday.