The Affordable Care Act will strengthen Costco Wholesale Corp. pharmacies’ already significant cash business, according to senior vice president of pharmacy Vic Curtis.

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Costco pharmacies expect lift from ACA

August 6th, 2013

ISSAQUAH, Wash. – The Affordable Care Act will strengthen Costco Wholesale Corp. pharmacies’ already significant cash business, according to senior vice president of pharmacy Vic Curtis.

“Cash is obviously an important part of our business,” notes Curtis, adding that it represents almost 40% of the chain’s prescription volume. “Insurance exchange pharmacy benefits will likely not have ‘dollar one’ or very extensive coverage of pharmaceuticals. I would expect limited coverage, high deductibles and the like.

“Any plan that makes consumers conscious of what they are paying for drugs works to our benefit. I would expect that the new plans will grow our business, not reduce it.”

Also raising the profile of Costco’s prescription counters are the warehouse club chain’s immunization offerings and medication therapy management (MTM) programs.

The ability of Costco pharmacists to quickly adapt to regional health issues such as the whooping cough epidemic in California and the recent issue with hepatitis A on the West Coast greatly supports the chain’s wellness efforts, Curtis says.

Offering immunization services in all outlets on a walk-in basis, the retailer administered over 300,000 flu shots last flu season. “It was very busy,” Curtis remarks.

Other vaccines provided by Costco include Tdap, pneumonia, Zostavax (shingles) and hepatitis B as permitted by each state and its laws. The chain also is developing a program to administer travel vaccines.

For MTM, Costco partners with Mirixa Corp., OutcomesMTM Inc. and the McKesson Pharmacy Intervention Program (PIP). Additionally, it runs clinical programs year-round in its warehouses, focusing on screenings for osteoporosis, heart health and lung health. The programs are all pharmacist-driven and free to members and nonmembers. New disease-focused clinical initiatives are in development for 2014 and beyond.

To create time for patient counseling and other patient-centric activities, Costco employs work-flow, central-fill, and staffing technologies. Curtis calls the technologies “huge advantages” in maximizing pharmacy efficiency and fostering patient counseling.

All of the wholesale club retailer’s 443 stores have pharmacies. In its last fiscal year, Costco’s pharmacy sales totaled $1.65 billion.

On the community outreach front, Costco has been cooperating with the Centers for Medicare and Medicaid Services on initiatives to use retail pharmacies and pharmacists as focal points for information and questions about the new health care law. Additionally, the retailer may partner with a database company to provide Web-based tools to facilitate plan availability and comparisons.

Costco also provides “the next generation of pharmacy benefits management.” The PBM includes claims processing along with the club retailer’s value pricing as the preferred pharmacy provider.

Benefits include one flat management fee charged on a per-member per-month basis. Discounts are offered through a nationwide pharmacy network, with additional discounts and lower pricing at Costco pharmacies. Also provided are formulary management services; drug utilization review; a state-of-the-art, online interactive reporting package; claims processing; prescription cards for members and dependents; a 24/7 pharmacy and member services desk; and mail-order and specialty pharmacy services.

In addition to Costco’s exclusive pharmacy provider pricing, all rebates and administrative fees that are received from drug manufacturers are credited to the payer at the point of sale. This means that prices are immediately lower and, unlike competing PBMs, the program does not create a “pricing spread” that is built in as additional profit.