How much return does that PhD provide?

Adding a PhD to a PharmD degree has a “poor rate of return on investment,” says Nicholas E. Hagemeier, lead author of a new study in the American Journal of Pharmaceutical Education. Hagemeier holds a PharmD, and is also a PhD candidate in the College of Pharmacy at Purdue.

The average starting salary of a new college graduate who holds a PharmD is more than $100,000 in the private sector. “Trying to persuade someone to turn down that salary, and instead pursue a PhD that will take, on average, about five years, and knowing that you will be paid a significantly lower salary when you’re done with school, makes the prospect of additional schooling less appealing,” Hagemeier says.

Those who pursued their PhD in a pharmacy-related field and found employment in academia or industry often report starting salaries that are $20,000 less than those of newly licensed community pharmacists. The researchers used net present value (NPV) and internal rate of return (IRR) to measure capital investment — in this case, graduate school. NPV was defined as the current value of future wage differences between a practicing community pharmacist and a PhD graduate in careers that are pursued upon graduation. The IRR is the rate at which cash flow (both positive and negative) from a particular investment equals zero. “Ideally, one would like the NPV to be positive and the IRR to be positive and greater than the next best alternative, such as the return on a 30-year U.S. Treasury bond. An IRR of only 1 or 2 percent would be considered pretty poor given current bond rates and stock market returns,” says Hagemeier.

Yet Hagemeier says that “a PharmD/PhD is a great combination. That clinical knowledge and training in research methodology is an attractive combination. Those people are hard to come by.”

Is that PhD degree worth it?

The figure plots the internal rate of return for PhD careers compared to practicing community pharmacists, 1982–2008.

Source: Hagemeier NE, Murawski MM. Economic analysis of earning a PhD degree after completion of a PharmD degree. Am J Pharma Ed. 2011;75(1): 1–10. Permission to reprint graphic granted by publisher.

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