Pharmac intends funding Opdivo, a drug used to treat advanced melanoma, following mounting pressure on the drug-buying agency to put money into immunotherapy drugs.
Pharmac made the announcement at a pre-Budget media briefing with Prime Minister John Key and Health Minister Jonathan Coleman.
The government said Pharmac would get an extra $39 million next year to enable it to fund the new immunotherapy drug for some 350 patients with advanced melanoma, along with several other new drug treatments.
Pharmac said the clinical data for Opdivo, or nivolumab, is stronger than that for Merck Sharp & Dohme's pembrolizumab, an almost identical immunotherapy drug, sold as Keytruda.
Pharmac chief executive Steffan Crausaz said funding went for Opdivo rather than Keytruda because of clinical data.
"Our expert cancer doctors have advised us that the data set is solid for Opdivo, that they have confidence that there is a survival advantage for patients with advanced melanoma, and the second part of that is really the good commercial negotiations we've been able to do with Bristol-Myers Squibb, who supply Opdivo."
The agency is not saying what share of the $39m funding Opdivo would take.
The other treatments to be funded include harvoni and viekira pak for Hepatitis C, Azithromycin for lung disease in children, rituximab for kidney disease in children, temozolomide brain and neuroendocrine tumours and oestradiol patches for menopausal women.
Pharmac intends consulting over its plan to fund the melanoma drug and if it receives approval of the board, patients could begin getting free Opdivo from 1 July.
Last week, it was announced that Opdivo made by Bristol-Myers Squibb was approved by Medsafe for use in this country.
Until then Keytruda had been the only new drug for advanced melanoma registered for use in New Zealand and patients backed by the Cancer Society and others had been urging Pharmac to fund it.
The Cancer Society said there was already enough information available to justify funding the new class of drugs.
The society's medical director, Chris Jackson, said cancer experts believed both Keytruda and Opdivo were effective.
Melanoma patients emotional at announcement
A group representing melanoma patients said they were emotional as the prospect of an effective funded treatment nears.
Melanoma New Zealand chief executive Linda Flay said patients were on tenterhooks waiting.
"These are the same class of drugs with very similar efficacies... It's sort of like comparing Coke to Pepsi, they're very, very similar in what they do and we would be very happy with either of these drugs being funded - as would melanoma patients, I'm sure."
Melanoma patient Leisa Renwick led a campaign to get an immunotherapy drug funded in New Zealand. Speaking to Checkpoint with John Campbell, she said she was excited and it was a good step forward.
"I'm trying really hard, and I think other people are too, not to count our chickens before they hatched.
"The 1st of July is the day we'll know for sure but I can't see Pharmac backing down now. I won't be completely confident though, until that day."