This paper evaluates whether the current compensation level for pharmacists in the United States is appropriate. Taking the position that pharmacist salaries are broadly fair — with perhaps a modest increase warranted — the paper draws on microeconomic, macroeconomic, and pharmacoeconomic principles to defend this stance. Using Bureau of Labor Statistics data and comparative salary figures across healthcare professions, the author argues that the median pharmacist salary of approximately $116,000 reflects the role's educational requirements and scope of practice. The paper also examines how rapidly rising healthcare costs, pressures on independent pharmacies, and the burden on patients factor into the broader question of pharmacist compensation.
The position taken in this paper is that the pharmacist in the United States is earning very close to what he or she should be earning, based on patient needs and services provided. The compensation for a pharmacist is, in other words, basically fair — with only a slight adjustment needed (perhaps $10,000 more per year) in the foreseeable future to be considered a just salary.
The U.S. Bureau of Labor Statistics reports that the annual median pay for a pharmacist in the U.S. is $116,670 — or $56.09 per hour. Those figures are based on 2012 data, so they may differ somewhat in subsequent years. The number of pharmacists employed in the U.S. in 2012, the last year for which figures were available, was 286,400.
The website salary.com claims that the median expected salary for a pharmacist in the U.S. is $120,171. The site bases its figures on a survey completed in March 2014, making it likely more current than the Bureau of Labor Statistics data. The publication U.S. News Money lists the average annual salary for a pharmacist at $116,670 — the same figure provided by the Bureau of Labor Statistics. That source also notes that the best-paid 10 percent of pharmacists in the U.S. made $145,910 in 2012, while the lowest-paid pharmacists earned just $89,280.
Those who earned upwards of $145,000 were primarily working in the pharmaceutical and medicine manufacturing industry. In 2004, the average salary for a pharmacist was just $80,000, rising to $90,000 by 2006. In comparison to other healthcare positions, pharmacists earn approximately $34,000 more than a physical therapist and $47,000 more than a registered nurse.
Microeconomics is the study of the behavior of individuals and individual businesses in terms of the allocation of services and goods, and how the decisions made within a particular business affect the supply and demand for those services and goods. As applied to pharmacist compensation, the central question is: what determines how much a pharmacist should be paid?
First, it is worth considering what a pharmacist's duties are to the public — and how those duties compare to those of other healthcare professionals. A pharmacist does more than simply dispense prescriptions, although that is how many people perceive the role. A pharmacist must be aware of how a given prescription will interact with medications the patient is already taking. The pharmacist must also communicate directly with the patient to explain how to take prescribed medicines, what potential side effects may arise, and what the correct dosage and schedule is (Bureau of Labor Statistics).
It is also the pharmacist's duty to provide healthcare advice to patients, including guidance on managing stress, the importance of a healthy diet, the need for exercise, and what equipment or technologies would best suit their needs. These responsibilities, however, overlap substantially with the duties of a Nurse Practitioner — and the typical NP earns approximately $89,000 per year.
Several duties a pharmacist performs are also somewhat similar to what physicians are asked to do, and the average physician's salary is $191,520. However, a pharmacist can receive a license after completing a four-year undergraduate degree and a graduate (PharmD) degree, whereas a physician requires eight years of university study prior to residency — which may add three to eight additional years. The cost to hire a pharmacist can therefore be reasonably justified at roughly $75,000 less than what a physician earns. Given that the physician has spent an average of three to six more years in preparation for diagnosing and treating patient needs, the difference between the two salaries appears fair from a microeconomic standpoint — with perhaps a small increase warranted for pharmacists.
Macroeconomics deals with the behavior of the economy as a whole and how prices and wages affect it. The relationships between national income, consumption, inflation, and other factors are all central considerations in a macroeconomic analysis. Because healthcare costs in the United States are rising at historically unprecedented rates, increasing pharmacist salaries further would not be in the best interests of the national economy — a point that supports the position that current pharmacist compensation is approximately right.
According to the U.S. Department of Health and Human Services (HHS), the rate of growth in healthcare spending has outpaced the growth rate in the gross domestic product (GDP). Between 1940 and 1990, real health spending per capita grew at 3.6% per year in the 1960s, increasing to 6.5% per year by the 1990s. Healthcare spending as a share of GDP jumped to 16% in 2005 and was projected to reach 20% of GDP by 2015.
The HHS report notes that some experts believe this rapid growth may hamper broader economic growth, and that rising costs in one sector of healthcare are likely to affect outcomes in other sectors. Increasing healthcare costs further by raising pharmacist salaries could contribute to government pressure to raise taxes, increase borrowing, or reduce investment in other critical areas such as education and infrastructure (HHS).
"Pharmacy market pressures and patient cost categories"
The position taken at the beginning of this paper was that the pharmacist in the U.S. is earning close to what he or she should be earning, based on patient needs, patients' ability to pay for the services provided, and the economics of healthcare. The average salary for a pharmacist in the U.S. is around $116,000 per year — well above what a Nurse Practitioner earns ($89,000) and yet well below what a physician earns (around $191,000, with specialists earning considerably more in certain medical contexts).
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