Sufferers of spinal muscular atrophy will have access to a life-saving drug for a fraction of the cost.
Spinraza will be made available on the PBS from June 1 this year for all patients under 18, Federal Health Minister Greg Hunt announced on Sunday.
It would have cost more than $367,850 a year for the medicine but it will now be $39.50 per script with concessional patients paying $6.40.
The medicine works by slowing progression of the disease and can significantly improve motor function.
The government subsidies will cost the budget $241 million but Treasurer Scott Morrison says it will help families deal with "a heartbreaking condition".
"For these kids, for their families there is no more essential service than keeping their kids alive," he told the Nine Network, in a pre-budget interview.
Mr Morrison took a particular interest in the push to list Spinraza after hearing about it at a forum in Canberra and within his own electorate.
"I looked a lot more into it," he said.
"I sat down with Greg Hunt and the prime minister and others and we said this is something you need to do.
"This is what a stronger economy can do. It can prolong the life of young kids."
The disease is the number one genetic cause of death of babies under two in Australia.