The federal government has announced it will stop a temporary program that has been keeping Medicare prescription drug premiums lower. The program, called the Part D Premium Stabilization Demonstration, will end after 2026. Starting in 2027, Medicare drug plans will go back to regular market pricing.

CMS, the agency that runs Medicare, shared the news in a July 28, 2026 fact sheet about 2027 plan bidding rules. The temporary program was created to smooth out premium swings after the Inflation Reduction Act changed how Medicare's drug benefit works.

The government was already scaling back the help. For 2026, CMS cut the direct premium reduction for enrollees from $15 to $10, according to the agency's July 28, 2025 announcement. CMS also allowed plans to raise premiums by up to $35 year over year under the program's rules.

Here is how the numbers break down for 2026. The national average monthly bid — the amount plans say it costs them to provide drug coverage — is $239.27. The base beneficiary premium is $38.99. CMS projected in September 2025 that the average total premium for a stand-alone drug plan would drop to $34.50, down from $38.31 in 2025.

That $34.50 figure includes the temporary $10 reduction. Without it, the headline number would look different. The wide gap between the $239.27 cost and the $34.50 premium is covered by other parts of the Medicare program, including reinsurance — a form of government backing that helps pay for very high-cost drug claims.

When the program ends in 2027, two things disappear at once: the cap on how much premiums can rise, and the direct subsidy that lowers what enrollees pay. Plans will set premiums based on what they expect to spend on drug claims, without those guardrails.

For people on Medicare, the $34.50 average premium projected for 2026 may not be a reliable guide once the help goes away. How much premiums actually change will depend on how expensive drug claims turn out to be, what happens with pharmacy rebates, and how much competition there is among plans.

The broader context is that the Inflation Reduction Act shifted more of the cost for the most expensive drug claims onto the insurance plans themselves. The temporary stabilization program was the government's way of easing that transition. Pulling it away suggests CMS believes the market can handle the new costs on its own. That is a judgment call, not a guarantee, and 2027 will be the first real test.