Australians will pay no more than $25 for prescription drugs listed on the government's subsidy scheme in a move that will bring prices down to 2004 levels.
From January 1, the maximum Australians will pay for medicines on the Pharmaceutical Benefits Scheme will drop from $31.60 to $25 after the federal government passed a bill to lower the general co-payment by $6.60.
"This will make a huge difference," Health Minister Mark Butler told Sunrise on Tuesday.
"It's obviously good for the hip pocket, and that's important, but it's also good for your health."
About one-in-13 Australians delayed or did not fill a prescription in 2023/24 due to the cost, according to the Australian Bureau of Statistics.
Labor had already brought down the maximum price for co-payments from $42.50 and frozen the cost of scripts for pensioners and concession card holders to $7.70 in 2023.
This further reduction will offer more relief, Mr Butler said.
The PBS has continually been upheld as a beacon of health policy by Australia's major political players, but it remains under threat from Donald Trump.
The US president has laid out plans to impose 200 per cent tariffs on pharmaceutical imports to the US following lobbying efforts by the powerful US pharmaceutical sector, which has long taken issue with Australia's drug subsidy scheme and wants the president to act.
His announcement could be seen as a way for the US to chip away at the PBS in exchange for a trade deal, but members of both major parties insist they are not willing to trade away the PBS.
Details of the tariff plan remain scant and when asked if the US administration had offered any further clarity, Mr Butler said "the honest answer to that is no".
"What we do know is that the Trump administration, perhaps unsurprisingly, is focused on trying to get their drug prices down," he told ABC Radio.
"Our northern star here is pretty straightforward.
"We are determined to protect our PBS. It's served this country well for eight decades ... and we will not be negotiating on those elements."
