Patients will have access to cheaper medicines at the pharmacy after new laws passed parliament.
The legislation lowered the maximum general co-payment on the Pharmaceutical Benefits Scheme by $12.50, falling from $42.50 to $30.
The measure was one of the cost of living relief measures as part of the Albanese government's first budget handed down on Tuesday.
The reduction will come into effect from January next year, and is expected to cost $787 million.
It's the first time in the 75-year history of the PBS the maximum cost of prescriptions will fall.
Health Minister Mark Butler said the changes would make medicines more affordable, after the maximum cost of prescriptions had doubled since 2000.
"This is going to be great for millions of Australian patients' hip pockets," he told reporters in Canberra.
"We know at a time of huge cost of living pressures that the price of medicines can be a really big impact on household budgets.
"Every year almost one million Australian patients go without a medicine that their doctor has said is important for their health because they can't afford it."
The coalition supported the laws lowering the medicine cost.
However, deputy Liberal leader Sussan Ley said broader cost of living relief measures from the government did not go far enough.
"It is important to note that this is one of the very few cost of living relief measures the Albanese government has announced so far, and it doesn't take effect until 2023," she told parliament.
"We hope the Albanese government does not consider their job is done on supporting Australian families with the rising cost of living and we will hold the government to account."
The bill was signed off in the lower house following amendments from ACT senator David Pocock, which give the Senate oversight of ministerial decisions regarding certain treatments.
Mr Butler also defended the decision in the budget to decrease funding for hospitals by more than $2 billion over the next four years.
The minister said the reduction in hospital funds was based on advice from states and territory governments.
"The amount that the commonwealth pays every year to state governments is based on the advice that (state and territories) give to us about the level of activity that they're having in their hospitals," he said.
