"I'm over the moon about this," Mr Fallen said.
He was especially pleased to know that MSD would supply a bridging programme for patients who were either paying for the drug themselves, or who wanted to start taking the drug.
The bridging programme starts immediately and runs until September 1, when the Pharmac funding kicks in.
The programme will be paid for by MSD.
"Good people have died because they can't afford this drug.
"It's inhumane.
"Many New Zealanders can't afford to pay for Keytruda themselves."
Mr Fallen said he hoped this would be the start of funding for other important drug therapies.
"I recognise that Pharmac can't afford to pay for everything. But I got behind this campaign because it affected me personally."
Mr Fallen has had two small melanomas removed, and has a long family history of cancers.
He said he was grateful to the Government for "stepping forward on this issue", the Labour Party for putting pressure on the Government, and petition organiser Leisa Renwick.