Costco Wholesale Corp. is raising the profile of its in-house pharmacy benefits manager, Costco Health Solutions, with a new offering to businesses, including non-Costco members.


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Costco puts 'next generation' PBM in spotlight

February 4th, 2013

ISSAQUAH, Wash. – Costco Wholesale Corp. is raising the profile of its in-house pharmacy benefits manager, Costco Health Solutions, with a new offering to businesses, including non-Costco members.

Calling it the “next generation of pharmacy benefits management,” Costco’s Business Prescription Insurance is available to self-funded employers with 50 or more employees.

The retailer emphasizes that its prescription benefit management program differs from those of other PBMs in that all rebates and administrative fees received from drug manufacturers are credited to the payer at the point of sale, resulting in savings for participants that it says are typically 10% to 15% greater than those of other drug plans.

The membership warehouse club operator emphasizes that its program has been designed on a cost-plus basis and does not create a pricing spread that yields it additional profit. The program is highlighted in the January issue of the retailer’s magazine, Costco Connection.

The magazine quotes assistant vice president Chris Pierce as saying, “The Costco Pharmacy adheres to the same Costco philosophy as other areas of our business; We keep a tight rein on expenses, take lower markups and pass discounts and rebates from manufacturers to our members at time of ­purchase.”

Employers who join the program can also access formulary management services; a drug utilization review; an online interactive reporting package; claims processing; mail order and specialty pharmacy services; and a member services desk that is open 24 hours a day, seven days a week.

Participants’ employees can fill their prescriptions at Costco’s in-store pharmacies or through a network of 64,000 independent pharmacies. Costco says it bases its pharmacy premiums for employees on actual costs, with the result that savings are passed on to employees in the form of lower co-pays and medication prices.

Participants also get access to the other services offered by Costco’s in-store pharmacies, including clinical services, walk-up immunization services and free health screenings.
Nippon Paper Industries, one of the early users of Costco Health Solutions, tells Costco Connection that the PBM has helped reduce its pharmacy costs by 43%.

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