Australia's drug regulator has approved a new drug to treat the early stages of Alzheimer's disease, but experts warn that less than one in five people with dementia will be eligible for the treatment, which could exceed $80,000.

The Treatment Cargo Administration (TGA) has registered Donanemab, sold under the brand Kisunla and developed by pharmaceutical company Eli Lilly to treat adults with early symptoms of Alzheimer's disease who have specific genetic characteristics.

Donanemab is infused intravenously through the arm every four weeks for up to 18 months and works by targeting amyloid in the brain - a study researchers believe this helps Alzheimer's disease.

Professor Christopher Rowe, director of the Australian Dementia Network, said the registration marks the first new treatment for Alzheimer's disease in 25 years, and it is the first time that affects the disease.

The drug approved 20 years ago temporarily improved symptoms, "but this drug actually reduced the rate of decline by about one-third."

While this is a "important first step" and hopes to eventually combine drugs to stop the disease's progress, Rowe warned: "The expectations may be a little high, because most people with Alzheimer's disease are not actually eligible for it."

To be eligible for a person must be in the early stages of Alzheimer's, mild cognitive impairment, and not susceptible to risk factors of the drug, he said.

“The biggest obstacle is that if people are already beyond the early stages of Alzheimer’s disease, people will be diagnosed as too late.”

The drug is also associated with side effects of brain swelling and bleeding, which is much higher in people carrying two APOEε4 genes.

TGA registration does not include people carrying genes, and Rowe is talking about the “unfortunate situation” because the gene variant itself increases the risk of raising young Alzheimer’s disease in his 60s.

Before starting treatment, the patient must be tested to determine their genetic status and an MRI scan is performed to detect any initial signs of cerebral hemorrhage and swelling that may make the drug unsafe. Patients also require continuous MRI monitoring of any cerebral hemorrhage while receiving treatment.

"We actually estimate that only about 10 to 20% of people with dementia are suitable for the drug, but given that 400,000 people in Australia suffer from dementia and about 40,000 people are diagnosed each year," Rowe said.

To obtain treatment, patients must also confirm their early Alzheimer's diagnosis by lumbar puncture or amyloid PET scans, which can confirm the presence of amyloid - neither of which are covered by Medicare. The drug is not on the Drug Benefits Program (PBS).

"This treatment can cost $80,000, and currently one person has to pay from change. The drug itself may be about $40,000, but there are also professional fees, infusion fees, MRI scans and amyloid PET scans to pay, too."

Eli Lilly has applied to include Kisunla in the PBS, which will be reviewed by the Pharmaceutical Welfare Advisory Committee (PBAC) in July.

"However, there is still a fair way to go, to determine whether this will be repaid by the federal government and if so, which patient is still there," Health Secretary Mark Butler said Thursday.

“Relevant scans of patients need to be considered.

"There is still some way to go, but it's very exciting news for the Alzheimer's community," Butler said.

There is a debate among researchers whether to reduce the rate of decline by one third enough to take the risks posed by such drugs.

"The patients and their families must be fully informed that they have to make this decision. Before they enter the severe stage of dementia, they may purchase for a few more years, and they must decide whether it is worth the money and the risk."

Professor Tanya Buchanan, CEO of Dementia Australia, said: “Dementia is the second largest cause of death for Australians and the leading cause of death in Australian women and we welcome any steps to improve the lives of dementia, family and caregivers.”

The Australian Dementia Network is undergoing trials for GP, which can perform blood tests to confirm Alzheimer's disease, which will help build the ability of doctors who can diagnose and allow people to receive treatment faster.