Costco Enters the Realm of PBM (Pharmacy Benefit Manager)

Chanelle buys her pistachios in bulk
Chanelle buys her pistachios in bulk

To kick start 2013, Costco made an announcement in its monthly newsletter that its new health program offers employees of small and mid-sized companies discounted prescription medicines through Costco’s in-warehouse pharmacies. Costco has reached out to its network of 64,000 independent pharmacies, and negotiated prices of certain drugs in hopes of benefiting the public while increasing its membership, as well as increasing purchases from those walking through its aisles to get to the pharmacy. With these prices in place, participants will reap significant savings of 10 to 15 percent over other drug prescription plans. Since Costco is one of the leading wholesale superstores, PBM category leaders such as CVS Caremark will likely pay close attention to Costco’s next moves, as well as how this move pans out.

So what does this mean for the pharma industry? According to Costco, customers have already started saying this new program has meant savings and convenience…but is this the beginning of a revolution that pharma companies should beware of? Will other major retailers follow suit with significantly discounted medicines to increase the number of bodies in their aisles? Will other pharmacies face increasing pressure to drop prices to match?

The outcome has yet to be determined, but this is definitely something that the healthcare industry will keep an eye on to see how it develops. We will be watching to see how the story unfolds, too.

– Chanelle Kasik


Chanelle Kasik is an Assistant Account Executive at TogoRun. She enjoys hip hop dancing and wandering around Costco for lunch eating FREE samples!