Many people look at Costco as a place for affordable bulk groceries and household supplies.
Now, Costco is finding another way to make its membership more valuable.
The warehouse club’s pharmacy business is growing rapidly as it expands programs aimed at improving affordability and convenience for members.
And if Costco continues on this path, members might have even more reasons to renew.
Costco’s pharmacy business is booming
Costco reported that pharmacy sales increased nearly 20% during fiscal 2026, helped by GLP-1 programs, fertility offerings, and digital tools that allow customers to pay for prescriptions ahead of pickup.
The results highlight how Costco is extending its value-focused business model into healthcare, an area where consumers are particularly sensitive to rising costs.
“Our ancillary businesses also performed very well across the board with gas, pharmacy, and travel leading the way, all growing at a faster pace than our overall growth rate,” said Costco CEO Ron Vachris during the company’s most recent earnings call.
Pharmacy’s performance is especially notable because the company achieved double-digit prescription growth, despite pressure from lower drug prices tied to Medicare’s Maximum Fair Price changes.
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Costco is making pharmacy more convenient
Costco’s pharmacy growth reflects investments in services designed to make obtaining medication easier, including programs targeting demand for GLP-1 drugs and digital prescription tools.
GLP-1 medications have attracted significant attention for their role in treating diabetes and, for certain drugs, obesity.
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Their cost and accessibility have become important considerations for patients, making affordability-focused pharmacy programs particularly relevant.
Costco also expanded its fertility programs, giving members another healthcare-related service through the retailer.
On the convenience side, Costco is pushing digital options such as Rx Mobile Pay Ahead and prescription pickup lockers.
These tools allow customers to complete more of the prescription process before arriving at the pharmacy, potentially reducing waiting times and making errands easier to fit into busy schedules.
The adoption numbers suggest members are responding. According to Costco management, many U.S. warehouses now see more than one-third of prescriptions processed through Rx Pay Ahead.
Vachris also emphasized the company’s approach to lower drug prices during the call.
“At Costco, when we see lower prices, we see an opportunity,” Vachris said, explaining that the company had taken advantage of lower GLP-1 and other drug prices to generate additional growth.
That approach fits Costco’s broader strategy of using competitive pricing to attract customers and encourage them to purchase more, rather than relying exclusively on higher prices to drive sales.
Pharmacy strengthens Costco’s membership value
Pharmacy is important to Costco because it gives members another reason to renew their memberships and visit its warehouses.
The retailer is already known for discounted groceries, household essentials, and affordable gasoline. Healthcare services extend that value proposition into an essential category that many households need throughout the year.
Prescription medications can represent a recurring expense, particularly for people managing chronic conditions or taking multiple medications.
Making the purchasing process more convenient while pursuing competitive pricing gives Costco another opportunity to demonstrate the benefits of membership.
The strategy also supports Costco’s ability to generate more business from existing customers.
Members who already shop for groceries or fill up their cars at Costco may appreciate being able to handle prescription needs during the same trip. That combination of convenience and value can help strengthen customer loyalty without requiring the retailer to rely solely on merchandise discounts.
The pharmacy business also demonstrates Costco’s ability to grow beyond its traditional retail categories.
There are still challenges, including pricing pressure and the need to keep healthcare offerings competitive.
However, Costco’s growth in the category suggests that additional services and digital convenience can help offset some of those pressures.
Maurie Backman owns shares of Costco.
