The family of an autistic five-year-old who used to sleep just three hours a night is praising a proposal to make an insomnia treatment cheaper in New Zealand.

Drug-buying agency Pharmac revealed the latest list of drugs and treatments it wants to be subsidised today, following an announcement from the Government that the agency would get an extra $60m in this month's Budget.

The agency has proposed funding melatonin, a drug which is given to children or teenagers whose neurodevelopmental disorders affect their sleep.

Jenny Cole, from Tokoroa, said the drug had been helpful for her five year-old grandson Charlie, who is autistic and has tuberous sclerosis, a disease which causes tumours to grow on his brain.

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"It's extremely difficult. He's full on all day, and then at night he's got insomnia. We've had to put a lock on his window because he opens it and throws anything he can out.

"He turns on the light, we've had an electrician put the switch up higher so he can't reach it. He'll go into the lounge and turn on the lights and play with his toys. He just feels it's time to wake up."

She spent around $75 a month on melatonin, which helped Charlie to sleep through the night rather than getting just three or four hours a night, often waking up at 4am.

"I have managed to pay for it, but it's $75 I could be spending on other things for him. Some families don't even get the opportunity to try it because they can't afford to continue with it."

Paediatric Society president Peter Newman said poor sleep patterns were common among children with neurodevelopmental conditions like autism or attention deficit hyperactivity disorder (ADHD), which made up 30 to 40 per cent of paediatric cases.

"You can imagine what that does to families, you have kids with behavioural challenges rampaging around in the evening, or just not settling."

The demands of caring for children with neurodevelopmental conditions meant the parents were often "not well-off", Newman said.

"The funding of melatonin will be very helpful. I myself have had a number of families who haven't even tried it because of the costs."

The melatonin drug mimics the hormone produced by the brain, which surges when lights are turned off and encourages sleep.

Health Minister Jonathan Coleman said that if approved, the drug would be made available to 5000 children and adolescents, and would have an "incredibly positive impact on the children, as well as their families".

Coleman announced yesterday that Pharmac would get $60m in extra funding over four years in this month's Budget, taking its total funding to $870m.

The agency would get an additional $20m next year, topped up by $11m from district health boards.

That concerned Labour's health spokesman David Clark, who said DHBs were already cash-strapped. They could be required to reduce services "in order to part-fund this election year announcement", he said.

A spokeswoman for Coleman said the DHB's contribution to Pharmac was in line with previous years.

In its latest proposal, Pharmac also recommended funding for four other new medicines and 33 existing treatments, including drugs for lung cancer and HIV.

Pharmac chief executive Steffan Crausaz said the agency was consulting on expanding access to Hep C treatments which would be a "life-saver" for people into the later stages of liver disease.

If the funding proposals were approved, the medicines and treatments would be available from 1 July 2017.