“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

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“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.”

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