Atopic dermatitis is a chronic skin condition that can have a significant impact on day to day life, including problems sleeping, increased risk of infection, depression and anxiety.

Unlike other types of eczema, it typically does not go away in a few days or weeks and often returns or flares up after periods of getting better.

"The condition may cause physical discomfort, which in turn can cause insomnia, emotional distress, depression, embarrassment, and social stigma," Melanie Funk from Eczema Support Australia says.

"As a result, people may avoid work, social situations, and relationships."

Rinvoq reduces itching and flare-ups by blocking enzymes that create signals in the body's immune system, resulting in inflammation.

More than 3500 people are expected to benefit from the new listing, Health Minister Greg Hunt said.

"Without this subsidy, patients might pay more than $27,000 per year treatment, instead they'll pay $42.50 or as little as $6.80 per script," Mr Hunt said.

The drug was developed by pharmaceutical company AbbVie, and Australia and New Zealand General Manager Chris Stemple welcomed the move.

"We remain committed to innovation and developing a deeper understanding of the disease with the hope of making a difference to the lives of Australians living with this debilitating condition," he said.

The listing of Rinvoq on the PBS has been recommended by the independent Pharmaceutical Benefits Advisory Committee.

It will be available from February 1.

Australian Associated Press