This week, the Turbull government will list Opdivo on the PBS, meaning that patients will have access to the therapy at a rate of just $38.80 per treatment, or $6.30 for those with a concession card.
The change, said to be one of the biggest-ever PBS listings, is expected to cost $1.1 billion and will give hope to thousands of cancer patients when other treatment options look to have failed.
"This drug changes lives and save lives," Health Minister Greg Hunt told SBS on Sunday.
"For patients and their families it provides the precious gift of a full and healthy life."
Opdivo treatments have previously cost around $5,000 each -- or up to $130,000 a year -- rendering the potentially life-saving drug out of reach for many patients.
The so-called "miracle drug" is a innovative type of immunotherapy that assists in empowering the body's own immune cells to attack the damaging cancer cells.
It's part of a form of cancer treatment known as Immuno-Oncology, which uses the same immune pathways cancer cells employ to evade the body's immune system defences.
It is estimated that about 4,500 cancer patients across Australia will benefit each year from the change.
Lung Foundation Australia CEO Heather Allan said listing Opdivo on the PBS would help thousands of Australian cancer patients.
"Lung cancer is a devastating disease that kills more Australians than any other cancer; more even than melanoma, prostate and breast cancer combined," Allan said in a statement.
"The lack of treatment options, especially in later stages of the disease, has resulted in a significant unmet medical need that had to be addressed."
Opdivo, hailed as a "revolution" in cancer treatment, has already been used in Australia to treat several high profile cases, including Hawks AFL star Jarryd Roughead who responded well to treatment in 2016.
Opdivo will be available on the PBS from the Royal North Shore Hospital in Sydney from Tuesday.