Budget 2016 will boost Pharmac's budget by $124 million over four years. The Government said DHBs would also give an extra $11 million towards Pharmac's budget next year.
"The Government's extra investment gives Pharmac more options on new medicines it can fund. It's up to Pharmac to make these decisions," Dr Coleman said.
Other drugs to be consulted on by Pharmac include for hepatitis C infection and brain tumours. Funding could kick in as early as July 1.
Tauranga woman Sarah Speight, who has been taking Opdivo since September 2014, said she was "thrilled" by the news.
"It's great. It's certainly going to be a huge relief for people who have been waiting for something that's going to be affordable that's going to prolong their life."
Mrs Speight gained access to the drug through a compassionate access programme, a sort of trial paid for by the company, and said it was also a relief to her to know she would still be able to access the drug if her contract is not renewed when it ends in September this year.
"I think it's a very, very good decision on Pharmac's part. We have the highest melanoma rate in the world so why are we the last ones to have these drugs funded?"
Mrs Speight said Pharmac would now need to continue to review the melanoma drug to ensure the one being funded provided the best outcome at a good price.
Tauranga woman Leisa Renwick, who led the charge to take a petition to Parliament calling for them to fund a melanoma drug like Keytruda, was also pleased to hear about the announcement.
"I'm really pleased. It looks like melanoma patients are finally going to have a treatment funded," she said.
"We're still behind Australia, they have all of the treatments funded, but it's a great first step."
Mrs Renwick had managed to pay for the drugs herself until now but said it would mean she could move back into the public health system.
"I believe in the public health system. The reason we pay tax is so that all New Zealanders can receive treatment."
It was not fair that only the well-off could afford the treatment needed to keep them alive, she said.
Her petition was due to be considered by the health committee for the first time today.
"I guess the petition is starting to achieve it's objectives. This is what I was hoping for."
Today's announcement confirms earlier statements by the Government strongly hinting that Pharmac would be getting more money in the May 25 Budget, which would enable a drug like Keytruda to be funded.
Labour has said it would direct Pharmac to fund a melanoma drug, but Mr Key has previously said any potential decision would be left largely up to the agency.
That would mean a large amount of extra funding would be needed, as Pharmac had other priorities for any extra money.
The Government does not pay for any of the new treatments for melanoma that have become available over several years. It pays only for chemotherapy, which is widely considered of little benefit against inoperable, advanced melanoma.
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Last week Opdivo (also called nivolumab) was approved for the treatment of advanced melanoma and two types of lung cancer.
Opdivo is the rival of Keytruda, the melanoma drug which some New Zealanders are paying tens of thousands of dollars to receive because state drug-funding agency Pharmac has decided that funding Keytruda is a low priority. Keytruda does not work in all patients, but some say it has saved their lives.
Both drugs take the same biological approach, which has been described as "taking the brakes off the immune system". They interfere with a tumour's ability to hide from the immune system, allowing the immune system to get on with its job of recognising and killing cancer cells.
New medicines considered
Following a funding boost by the Government, Pharmac has opened consultation on funding:
• Opdivo (nivolumab) for advanced melanoma
• Harvoni and Viekira Pak for hepatitis C infection
• Azithromycin for bronchiectasis in children
• Temozolomide for brain tumours and neuroendocrine tumours
• Rituximab for nephrotic syndrome in children
• Oestradiol patches for menopausal women
- Nicholas Jones and Amy Wiggins
