The bigger picture


an pharmacist holding up a piggy bank employee pharmacist wages money earning funding salary salaries wage

Are low employee pharmacist wages the result of a flawed and unsustainable system due to price disclosure?

In a recent poll of AJP readers, the majority of respondents (49%) said “inadequate remuneration” was the biggest challenge Early Career Pharmacists are facing in their career.

Following this were the options, “lack of opportunities for career progression” (11%) and “too heavy workload” (10%).

Wages are clearly far and away the top concern for young pharmacists, a result that mirrors the feedback published in the PSA’s ECP White Paper.

Many of those consulted by the PSA indicated that the current pharmacy award rate is low in comparison to other healthcare professionals and should be re-negotiated.

However some community pharmacy owners are arguing that the reason wages are so low is because the current system is fundamentally flawed.

Peter Feros and Paul Riley, proprietors of Cincotta Discount Pharmacy in Merrylands, NSW, say that under price disclosure, the reduction in remuneration for dispensing PBS prescriptions has decreased by 22% – reducing the average community pharmacy’s annual income by $100,000.

Meanwhile, costs have been rising and many owners are unable to keep up.

“Every July, costs go up, rents go up, electricity goes up… Labour costs themselves are 62% of the cost of dispensing.

“How have we stayed afloat? With generics and wholesaler rebates,” says Mr Feros, a veteran of the industry who has an interest in several pharmacies. 

“Remove these rebates and the community pharmacist income is below expenses growth and average wage growth.”

In addition the accelerated Weighted Average Disclosed Pricing Program (WADPP), which introduced a 12-month cycle, reduced the average community pharmacy’s profits by a further $30,000 per annum, placing further pressure on owners, says Mr Feros.

Employee pharmacists leaving the sector

Reductions in the pharmacist hourly rate have led to many leaving – or thinking about leaving – the sector.

Mr Feros concedes that employee wages are low.

“The community pharmacist award rate of pay has traditionally been ridiculously low. So much so that, to retain pharmacists, community pharmacy has traditionally paid employed pharmacists above the award,” he says.

However he cites PPA statistics that show that as price disclosure has cut into PBS remuneration, the rates paid to employee pharmacists have concomitantly dropped from $37 per hour in 2009 to less than $33 in 2015 – a 10.8% decrease.

Mr Feros stresses that rebates have not gone straight into owners’ pockets, however some AJP readers are sceptical.

“I must have missed the data showing the spike in wages when Lipitor generics made owners up to $80+ profit per box for 18+ months,” said reader Philip Smith.

Mr Feros points out that in 2011, over-award payments added up to $120 million.

But since the drop in wages from 2009 to 2015, the expenditure on pharmacist over-award payments have also decreased.

And while the average adult income in Australia is about $80,000 per annum, for pharmacists it sits at about $65,000.

With sector competition and lowered income, pharmacies are trading out their more experienced pharmacists for cheaper ones, suggests Mr Feros.

“How pharmacists are keeping ahead of the game is by replacing higher-paid labour with lower-paid labour – or starting off with lower-paid labour like Chemist Warehouse does.”

A Catch-22 situation?

The low award rate is actually holding back current PBS calculations, argues Mr Riley.

“The government dispensing fee is calculated based on the award wage,” he says.

If the award rate was raised at least to the current paid rate, it would have a positive impact on negotiations with the government regarding PBS funding, Mr Riley suggests.

“The government in calculating remuneration doesn’t look at the paid rate, it looks at the award,” he says.

“Let’s at least go up to the paid rate. We’ve discounted our own profession by not paying our staff enough money.”

Mr Feros agrees.

“They have undervalued our labour for 40 years. Pharmacy has always been the lowest-paid healthcare professional, even since I graduated from the University of Sydney 40 years ago.

“Clearly pharmacists’ hard-earned skills need to be more highly valued.”

He says because Chemist Warehouse gets about 70% of its income from front of shop sales, it’s based on a less risky business model. 

“Perhaps if we could get the award up to the paid rate, big discount chains like Chemist Warehouse may have to raise theirs and it would offset the disadvantage.”

Pharmacy organisations

PSA has recently highlighted the impact of price disclosure on wages.

“Low wages in community pharmacy are a direct result of price disclosure hitting community pharmacy as negotiated between the Pharmacy Guild and the Federal Government,” said PSA National President Shane Jackson this week.

“We know that when gross profit per script is up, pharmacy owners pass those profits on to employees.

“We need a much stronger Seventh Community Pharmacy Agreement with all parties around the table—including PSA—to create better outcomes for consumers, adequate remuneration for the profession and ensure delivery of programs and services are focused on health outcomes.”

Dr Jackson says that the profession also needs to look outside of Government and Community Pharmacy Agreements to new roles and new remuneration.

“PSA has been working tirelessly to secure funds to expand pharmacist roles and remuneration, including through the Primary Health Networks, in areas such as minor ailments, General Practice pharmacy and by integrating pharmacists in Aboriginal Health Services.

“There is no quick fix to this. If we are to address this important issue, a longer term strategy is needed – and that’s why PSA is leading the 10 Year Action Plan for Pharmacist Practice in Australia to scale-up new roles and new remuneration, for the benefit of consumers.”

Meanwhile the Pharmacy Guild has said that maintaining a strong pharmacy model would be the best supportive measure towards higher wages.

“It has to be around the viability and sustainability of community pharmacy, and bringing new and innovative ideas to community pharmacy,” said Guild President George Tambassis at a seminar about remuneration last year.

“Unless we can create a viable pharmacy network then there’s no way to find a solution.”

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38 Comments

  1. David
    24/08/2017

    Stop the discounting!!! Pays can go up as a result. Prices of drugs shouldn’t have been allowed to be advertised, but good old warehouse was once again to be blamed and not punished for it

    • United we stand
      24/08/2017

      Easier said than done but the point still stands.

      • David
        24/08/2017

        There is no need for the ludicrous discounting. Why destroy pharmacy just to be taken over by supermarkets? How is that helping the industry and employment

  2. Tania Wood
    24/08/2017

    We are our own worst enemy – we expect the government to pay for everything then do services for free like blood pressure checks when as a customer said ” great the doctor charges $50 upfront I’ll come to you then” now we do a large number every day at expense to other things like waiting times and counselling as customers won’t wait until you’re finished – we help people with their blood glucometers free of charge when even diabetes instructors charge a fee – we do Webster packs for free when it costs us a great deal in employee costs – what other profession does this ? Are we crazy ? We can’t continue to be the nice guy otherwise we will all end up unemployed replaced by techs and machines – let’s start getting paid for what we do and value our own proffesio

    • cathy beckhouse
      24/08/2017

      You do Websters for free? That’s the first change you should make.

      • United we stand
        24/08/2017

        The discounters down the road will do them free. They subcontract it out to some poor soul with an ABN number getting $300 per week to pack over 500 webster packs. And if they’re not happy with the workload they terminate the contract without a flinch since they were hired as a business not an employee. I’ve seen it happen so many times.

        I’ve seen ppl working 60 hour per week for a mere $300 to keep up with the packs. At some point his whole family was helping him so he could earn a living.

      • olga
        25/08/2017

        It was costed out a few years ago at $15 per Webster. That’s including deliveries, redos, the nursing home on the phone about ???. Let them do Websters. In this climate, where they are losing more money on scripts, they are going backwards at a great rate.

        • United we stand
          25/08/2017

          Except they’re not. These things get subcontracted out to recent immigrants desperate for work and international students getting cash in hand. Discounters always win

    • olga
      25/08/2017

      Have to stop doing services for free. What other profession does services for free? Not doctors, solicitors, accountants, architects, speech therapists, etc. Only the pharmacist who’s entrenched by old outdated thinking. Start charging for services. That’s where the money is. Your customer is never going to say, now that you’ve spent your valuable time consulting me, I should pay you. That’s never going to happen. When a pharmacist is asked to consult, take a blood pressure, etc, they should say upfront, that will cost you $$. That way the customer knows there is a fee and can choose whether they will have the consult or not. A fee could be refundable if they buy the product recommended because often when you consult, the customer doesn’t buy the product. They will probably buy it down the road at CW for less. The pharmacy body, that should be representing pharmacists, should send out to each pharmacy a guideline of charges for e.g. blood pressure, unable to work certificate, consultations, etc then it would level the playing field. Also, the government may come to the party at some point and do a co payment as they do with doctors under Medicare. It’s never going to happen if we don’t charge for our time. What does it cost? Add up a portion of the rent, electricity, a pharmacist wage and you get an answer that doesn’t look good at all. Free is never free, it’s costing you every time you consult when you could be attending to that script, etc.

  3. Greg Kyle
    24/08/2017

    Everyone blames the PBS remuneration, but few in pharmacy blames the profession! Blaming the “evil” and “stingy” government is an easy hit. Saying pharmacists should directly charge consumers for services is not so easy, but needs to be done. I have been saying for years now that pharmacists are their own worst enemy. They complain about margins being squeezed, but (as Tania says above) keep giving everything away! If you are using your brain, it is a professional service and there should be a professional fee for that. If the retailers don’t charge, they have no grounds to complain that they are not viable!
    Peter Feros even in quoted in the article that a big-box discounter is more viable because their business model is not majority reliant on something it can’t control – PBS remuneration. Other businesses need to learn and build non-PBS remuneration … to survive – it’s pure Darwinian survival of those most able to adapt to the conditions.

    • Paul Sapardanis
      24/08/2017

      Absolutely correct Greg. All we seem to do as a profession is ask for a third party to pay for things. Heres a thought why dont we get the user to pay? Three months ago I was physically threatened for asking for a gold coin to take a persons blood pressure. I do not offe r NDSS in my pharmacy as the remuneration of $1 per transaction is below cost. Deliveries are no longer offered and I demand PAYMENT for stat decs/certifications. Until WE change and charge for services we are going nowhere

  4. David
    24/08/2017

    People dont like paying for things. Incorporate the services into the script price eg make general patients pay at least 15 bucks for their script instead of this rediculous 5.30 that the bloody discounters are charging and then we can get the service price down. We need someone with business sense setting guidelines for pharmacy and breaches should be punished accordingly. Price disclosure is only part of the problem, the discounters are also a major problem.

    • M M
      24/08/2017

      Price disclosures as well as CPAs are the problem. Discounters are not the problem. They have chosen their model. They make profits and grow year over year. They offer what our customers want. We think that customers want service! Surprisingly, it is not RIGHT. Prices come first then service. When people compare price to service, lower prices win. Why? Because they get quality product and service. The vast majority of Discount Stores are QCPP accredited.

      We lack innovation and leadership. Someone is talking about a 10 year plan? Really? we are 50 years behind already.

      • David
        24/08/2017

        M M! Chemist warehouse gives people what they want. Yeah sure. But what about looking after your staff and the profession? You aren’t delivering what the staff want. Without staff, you don’t have a pharmacy. Make your choice. Maybe then you can focus on retail and give pharmacy back to the Pharmacists. You don’t value our profession. I heard someone on this forum say that today’s society is affluent. They can pay more for scripts. What’s your plan to increase wages? Discount more and sell more vitamins without advice. Please, give me a break! You would happily see our industry fall into the hands of the supermarkets/Amazon. Chemist warehouse is a joke to the profession. We need to increase the floor price of scripts, and look to get more funding and recognition from private health providers.

        • M M
          24/08/2017

          They do give people what they want. They have more customers and grow year over year for the past 20+ years.

          • William
            24/08/2017

            Exactly and the sooner that everyone understands that, the better.

          • David Lund
            24/08/2017

            Pay your staff what they deserve. I will fight you till the end!

          • M M
            24/08/2017

            Yes, staff should be paid what they deserve. But it never happens. Pharmacists are doing a great job across the country. If every one of us left because the pay was low or work conditions were not proper, we will get the right pay and the right woek conditions.

          • David
            24/08/2017

            We need to control them by smart government policy and improving competition between pharmacies.

          • M M
            25/08/2017

            How do you think competition can be improved?

          • David Lund
            25/08/2017

            A floor limit being placed on General patients scripts by government policy. ie 15 dollars instead of 5.30. It is possible, and I hope it is done soon to save the profession

          • M M
            25/08/2017

            But this will never happen? Why do you think it is possible. And how can you convince the government to increase out of pocket spend by approx 3 folds??

          • David
            25/08/2017

            Pharmacist wages

  5. JimT
    24/08/2017

    Basic business principle….Dollars pay the bills, not percentages. eg NHS approx 7% mark-up plus disp fee. Basket of scripts is say $1000 so that was $70 mark-up component pre disclosure. same basket of scripts is say $650 now so mark-up is $45.50. That’s a $24.50 loss. All businesses other costs have risen. Some of the smart big boys even have that worked out. They know what increase in $profit they require and set there mark-up % to deliver that eg power companies, toll companies etc. so our negotiators with the Govt./Guild agreements may have let us down big time here. With the current arrangements you can’t get blood out of a stone so pharmacist wages being so reliant on script $ profit have nowhere to go but at best stay the same which is a decrease in real terms………..let alone any increase………as they say ……….doing the same thing and expecting different results is a sure sign of insanity

    • M M
      24/08/2017

      If we dont set any agreements with the government, there will be no price disclosures. I wont call then “OUR NEGOTIATORS” – PGA can not upset the government but they also try to set a balance. The cuts are always mirrored by an increase in remuneration for services. PGA does their best but it all falls within the current pharmacy model. If we had this model changed, we will have a better future.

  6. The Cynic
    24/08/2017

    The Guild once again circles it’s wagons around a failing system. It hasn’t worked for 15 years and will continue to not work.

    • Andrew
      24/08/2017

      Oh the system works, just not for the benefit of “customers” or the employees that serve them.

    • David
      24/08/2017

      Ha, and your system will. Increase unemployment, reduce wages further. You are the reason for the wages reduction in the first place for rediculously reducing the price of medicines

  7. Owner
    24/08/2017

    You have no voice at the bargaining table…. unless you build a power structure you will get squashed. This isn’t even the end wait and see how bad wages are in 5 years with inflation continuing its march!

    • United we stand
      24/08/2017

      I agree. Average Wages will sink to about the $30 mark and stay there for the next decade.
      In 10 years, automation, drones and online pharmacies will change the landscape so much, unemployment and oversupply will be rampant across the profession. Be smart and plan ahead.

      • David
        24/08/2017

        The population is increasing, and unemployment will be increasing ???How is that meant to be a good thing??? People should be working, not machines! Otherwise, the government should should place a ban on reproduction now to stop a recession. Lunacy

        • United we stand
          24/08/2017

          If Uber drivers end up getting replaced by machines in 5 years then pharmacy is on track to be transformed in 10. Guaranteed. Small businesses will not oppose since they will reduce their labour costs and since when has anyone listened to employees.

  8. William
    24/08/2017

    Good luck to those sensible pharmacist who have or will leave the trade. Everyone should realise that protected jobs cannot survive. Everything needs to be open to change and everyone needs to realise that their first job most likely will not be their last.
    I smile when I read that survey of workers feel they are under paid, does anyone really think that they would say that they were adequately or over paid?
    The trade needs to adjust to the times, rationalise, incorporate productivity measures and change.
    There are too many graduates being generated by universities on the expectation of good paying jobs. When this does not eventuate they get frustrated and depressed.
    They need to pick themselves up, seek advice and get a job elsewhere. Life is not easy and the sooner they accept that and get out from under the “protected species” umbrella the better they will be.

  9. David
    24/08/2017

    Like ive said before. We should raise the entry OP and dry up their supply

    • United we stand
      24/08/2017

      We have no power over universities. It’s a free market and they’re making millions churning them out.

  10. United we stand
    25/08/2017

    Let’s call it what it is. PGA is the primary voice of community pharmacy, the guys negotiating the cash flow and Medicare funded programs for us. Now, if what they could negotiate has made Community pharmacists the lowest paid health professionals and indeed one of the lowest paid professions in Australia, isn’t it time to try a new tactic and have other ppl at the bargaining table. Clearly they’ve failed.

    • Andrew
      25/08/2017

      Don’t forget that PGA also responsible for the rules that have resulted in crazy rents for some

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