New medicines, but no PBS cuts

New treatments for multiple sclerosis, breast cancer and skin cancer will be paid for under a $1.6 billion funding boost for subsidised medicines.

However, an expected cut in what the federal government pays for medicines failed to materialise in Tuesday's budget.

Nor did a push to strip some over-the-counter medicines from the Pharmaceutical Benefits Scheme.

Treasurer Joe Hockey said the $1.6 billion, five year funding increase would help give 1000 people subsidised access to expensive melanoma treatments.

"Some of these treatments have until now cost up to $131,000 per course of therapy," he told parliament.

"Now they are accessible for all Australians."

The government has also saved $252.2 million over five years from price changes to already listed drugs.

The government was expected to announce a $3 billion saving from a five per cent reduction in pay-outs to pharmaceutical companies, and a $1 billion saving from removing simple pain killers from the PBS.

However, negotiations with the drug companies and pharmacists are continuing.

WHAT'S IN THE BUDGET FOR SUBSIDISED MEDICINES

* $1.6 billion over five years for new and amended drug listings.

* New treatments for multiple sclerosis, breast cancer and colorectal cancer.

* Savings of $252.2 million over five years from price changes to already listed drugs.