Pharmacist Job Market: Salaries Keep Growing While Retail Employment Drops

October is American Pharmacists Month, so it’s a good time to update our exclusive annual analysis of pharmacist salaries.

For 2018, U.S. government data show that the average gross base salary for a pharmacist at a retail, mail, long-term care, and specialty pharmacy exceeded $123,000—up slightly from the 2017 figure. Pharmacists who work in hospitals had greater salary increases than did pharmacists in outpatient dispensing formats. However, pharmacists at physician offices saw their salaries decline for the third straight year. Below you will find complete details, organized by practice setting.

One surprise: Total pharmacist employment did not grow in 2018, and the number of pharmacists working in retail settings decreased. This pushed the share of pharmacists who work at hospitals to a new high. Are we seeing the early warning signs of employment losses due to retail pharmacy challenges?

SHOW ME

We rely on the latest Occupational Employment Statistics (OES) data from the Bureau of Labor Statistics (BLS). BLS and the State Workforce Agencies (SWAs) collaborate on the OES survey. BLS funds the survey and dictates its structure, while the SWAs collect most of the data. The OES survey categorizes workers by detailed occupations based upon the Standard Occupational Classification (SOC) system. For more on these data, see the OES FAQ page.

The Pharmacist occupation code is 29-1051. Using these data, we identified pharmacists working in various retail and non-retail settings based on the NAICS (North American Industry Classification System).

Note that BLS computes the annual wage data by multiplying an hourly mean wage by a "year-round, full-time" figure of 2,080 hours. The data exclude bonuses and employer costs of nonwage benefits, such as health insurance and contributions to retirement plans. The data also exclude business owners and partners in unincorporated firms. Independent pharmacy owners are therefore not included in these figures, though pharmacists employed by an independent pharmacy are included.

THE MONEY

The chart below profiles overall employment and salaries for U.S. pharmacists in 2018:

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Here are our observations about the 2018 trends:

• Total pharmacist employment did not grow in 2018. Total U.S. pharmacist employment comprised about 309,000 people in 2018—comparable with 2017. The 2018 figure differ from a multi-year trend of consistent employment growth. All segments of the outpatient dispensing category showed a drop in pharmacist employment from last year’s figures. The biggest drop occurred at mass merchants with pharmacies.
  
  From 2013 to 2018, employment grew by nearly 19,000 people (+6%). I’ll review the outlook for pharmacist employment in an upcoming article.

• Hospitals continue to grow as a source of pharmacist employment. The share of employment at retail, mail, long-term care, and specialty pharmacies has declined, from 65.2% of pharmacist employment in 2010 to 59.4% in 2018. Meanwhile, hospitals’ share of pharmacist employment has grown, from 23.2% in 2010 to 25.8% in 2018. The remaining pharmacists worked at manufacturers, wholesalers, government agencies, non-hospital healthcare providers, and other organizations.
  
  This shift is occurring as hospitals and health systems pursue specialty pharmacy dispensing revenues. In 2018, about 20% of hospitals owned a specialty pharmacy, compared with less than 9% in 2016. Larger hospitals were much more likely to have a specialty pharmacy. See As Hospitals Pursue Specialty Pharmacy (and Walgreens Bets More on 340B), PBMs Become Their Best Frenemies .

• Pharmacist salaries at hospitals grew more quickly than those at other locations. Salaries for pharmacists working at hospitals grew by 2.1% in 2018. This exceeded growth in salaries for pharmacists working in outpatient dispensing settings. See the green line in the chart below.
  
  However, pharmacists in physician offices (blue line) saw their salaries drop for the third consecutive year. These sites account for a small share of total employment. The decline may reflect the challenges facing physician-owned pharmacies. See Section 3.3.3. of our new 2019–20 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors.
  

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• Pharmacist salaries exceeded those of other healthcare workers. Salaries for all healthcare employees averaged $82,000. Thus, average pharmacist salaries were about $42,000 (+51%) higher than those of average healthcare salaries. Growth in average pharmacist salary was comparable to that of the average healthcare workers—whose salaries grew by 1.5% last year.
  
  Consistent with previous years’ figures, 14 of the top 15 highest paid U.S. occupations were in healthcare. Pharmacists were the 36th most highly paid occupation, edging out Astronomers and Physicists. (Visit https://www.bls.gov/oes/current/oes_nat.htm and sort by the Annual Mean Wage column.) Total base compensation for U.S. pharmacists was $38.3 billion in 2018—an increase of $633 million over the previous year’s figure.

Retail pharmacies are experiencing a period of intense competition that continues to reduce prescription profits. The pharmacy industry faces the prospect of a shakeout that will sharply reduce the number of U.S. pharmacies. After years of stability, the number of pharmacists working at retail locations is trending downward.

In my next article, I’ll review what the BLS sees for the future. Spoiler alert: It’s not pretty.