“We run a traditional pharmacy business,” explains
Michael Mastromonica, one of the senior executives in
charge of Costco’s pharmacy program. “It’s then
infused with the Costco philosophy.”
Following the Costco philosophy means, in addition to keeping a tight rein on expenses, adhering to the
same strict markup rules—no more than 14 percent—
that guide Costco’s pricing throughout the warehouse.
Finally, says Michael, “we also pass drug rebates
from insurance and/or pharmaceutical companies back
to members instead of the company.”
“Our prices are not inflated to maximize insurance
reimbursements and penalize the cash customer,” says
Charlie Burnett, senior vice president of pharmacy for
Costco. “We provide a service, and our members
respond with high-volume purchases. No chain has better pricing than we do in the country.”
“Even if a member is well insured, our prices are
often better than their co-pay,” says Jennifer Mann, a
Costco pharmacist in Goleta, California.
The savings have struck a chord with Costco members everywhere.
“We filled more than 18 million prescriptions in
2004,” says Michael. “We will probably fill more than
20 million in 2005.”
Trust and technology
When it comes to prescriptions and personal
health, however, it’s not just about price. It’s about
trust and service.
“Staying up-to-date and aware, and filling the modern medical needs of our members—this is the mission
of Costco’s pharmacy program,” says Charlie.
To reach that goal, pharmacists must have a level of
expertise that can only come from ongoing education and
exposure to the unique environment presented at Costco.
“All of our pharmacists are licensed and must have
graduated from an accredited college of pharmacy,
passed a state exam and served an internship under a
licensed pharmacist,” says Michael. Additionally, many
worked for Costco as they gained their pharmacy education, giving them an education in the way Costco
cares for its members, and the high volume of activity
(see “Young, smart and dedicated”).
To handle that volume, Costco is constantly breaking new ground in finding the best technology to
process orders. A work-flow management system
tracks prescriptions from the time they’re accepted by
the pharmacy to the point where they’re handed over to
customers. “Every order is assigned a number, and we
can locate and keep track of every one at any point in
the process,” says Charlie.
A computerized system uses individual bar-coded
counting cells filled with corresponding bar-coded
drugs that, when instructed by a pharmacist or a technician, automatically dispense the correct number of
pills into a bottle.
Costco Pharmacy’s drug-interaction computer program links all U.S. Costco pharmacies (warehouse and
online) to a central Costco prescription information
center. All health information and prescriptions are confidentially funneled through this database prior to
orders being filled so that potential drug-to-drug and
drug-to-allergy interactions can be red-flagged.
Costco pharmacists are
young, smart and dedicated
PERHAPS AS IMPRESSIVE as the enormous amount of work required
to become a pharmacist at Costco is the fact that so many pharmacists
have worked at Costco before, during and after acquiring their education.
Johnny Lang started as a front-end assistant in 1990. Tanya Yacharn
began as a stocker in 1997. James Deal started by pushing carts in 1991.
Daniel Serritella began with Costco in the bakery.
Dozens of Costco pharmacists from coast to coast began their
careers more than a decade ago, working part- and full-time at Costco as
cashiers, clerks, bakers and cart pushers while satisfying the rigorous educational curriculum—four additional years of schooling, often year-round—
that becoming a pharmacist demands. After graduation, they decided to
remain with Costco, combining their new-found expertise with the unique
knowledge that comes from years of working with members.
“My mom’s been a pharmacist for about 30 years,” says Brad
Hanna, pharmacy manager in Turlock, California, whose mother, Susan,
is a Costco pharmacist in Northridge. “She used to bring me into the
pharmacy when I was a kid,” says Brad, who began his career with
Costco as a pharmacy technician in 1997. “Even going through college,
it felt like the thing I should do.”
“Many people don’t realize what you need to do to become a pharmacist,” says Jennifer Mann, pharmacy manager at Costco in Goleta,
California, who started her Costco career 14 years ago as a cart pusher
before answering the call to the medical field in 1996. “It was the flexibility and support that Costco provided that made it possible for me to
work and go to school.”
“It was hard, but I gained a lot more experience,” says Jennifer Smith,
30, who began with Costco as a pharmacy clerk in 1996.
“When that one patient comes back to you, and you see the
results,” says Brad, “it makes all the work worthwhile.” IC
“I love working with our
patients,” says Melody
Jameson, Costco pharmac
manager in Puyallup,
Washington, who began as
a Costco cashier in 1989.
“Over the years you have t
opportunity to build real
relationships with them.”