Thursday, June 08, 2017

Average Pharmacist Salaries Hit $120,000, but Growth Again Lags Other Healthcare Professions

Time to update our exclusive annual analysis of pharmacist salaries. As always, we rely on the latest Occupational Employment Statistics (OES) data from Bureau of Labor Statistics (BLS).

In 2016, the average gross base salary for a pharmacist at a retail, mail, and specialty pharmacy topped $120,000—up 0.6% from the 2015 figure. Retail employment expanded, with the greatest growth at drugstores.

Meanwhile, the share of pharmacists who work at hospitals grew again. Pharmacists who work at hospitals also had salary increases that exceeded those of the average pharmacist. As I explain below, the specialty boom and generic plateau continue to drive the pharmacy industry’s evolution.

Though pharmacist salaries are growing, they are not keeping pace with those of other healthcare practitioners. That disparity should be troubling to every pharmacy school dean.

SHOW ME

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 at retail, mail, and specialty pharmacies by analyzing the following NAICS (North American Industry Classification System) industries:
  • Chain, independent, and long-term care (LTC) pharmacies: NAICS 446110
  • Supermarkets with pharmacies: NAICS 445100
  • Mass merchants with pharmacies: NAICS 452000
  • Mail pharmacies: NAICS 454100
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 below show full-time, gross salary data. The wage data exclude bonuses and employer costs of nonwage benefits, such as health insurance and employer contributions to retirement plans.

THE MONEY

In 2016, the average gross salary for a pharmacist at a retail, mail, and specialty pharmacy was $120,188—up 0.6% from the 2015 figure. (See the table below.) That growth rate is higher than last year’s, but far below the annual growth rates from 2011 to 2014.

[Click to Enlarge]

Here are my observations about the 2016 trends:
  • Mass merchants remain in the lead. For the fifth consecutive year, pharmacists at mass merchants had the highest average salaries, earning a full-time average of more than $122,000. However, pharmacists working in these stores were the only ones to experience a decline in average salary (-0.4%). Annual salaries at supermarkets and mail pharmacies were lower than those in other formats.
  • Retail pharmacies continue to show steady growth. Salary growth for pharmacists at chain, independent, and LTC pharmacies was (0.4%), which is slightly higher than last year’s figure. Employment, however, grew more than quickly (+4.9%) than it did at all other dispensing formats. This growth is consistent with the higher level of prescription growth shown in Latest Data on Pharmacy Market’s Evolution: The Real Story Behind the Retail vs. Mail Battle.
  • Mail employment returned to 2014 levels. Pharmacist employment at mail pharmacies declined by 19%. Recall that employment for 2015 grew by 20%, so employment is now only slightly below its 2014 level.

    This apparent volatility is due to sampling variability in the OES survey. Since mail pharmacies employ a relatively small number of pharmacists and the sampling error of the estimates is relatively high, the year-to-year differences are not statistically significant.
  • Hospital employment keeps growing. According to the BLS, total U.S. pharmacist employment was about 305,000 people in 2016. Since 2010, employment has grown by 37,480 people (+14.0%).

    Employment continues to shift, however. The share of employment at retail, mail, and specialty pharmacies has declined, from 65.2% of pharmacist employment in 2010 to 61.6% in 2016. Meanwhile, hospitals’ share of pharmacist employment has grown, from 23.2% in 2010 to 24.8% in 2015. The remaining pharmacists worked at manufacturers, wholesalers, government agencies, non-hospital healthcare providers, and other organizations.
  • Pharmacist salaries exceeded those of other healthcare workers, but salary growth lagged again in 2016. Salaries for all “Healthcare Practitioners and Technical Occupations” averaged $79,160. Thus, pharmacist salaries at retail, mail, and specialty pharmacies were about $41,000 (+52%) higher than average healthcare salaries.

    As the chart below shows, the average pharmacist salary grew much more slowly in 2016 than did the average salary for all healthcare workers, whose salaries grew by 1.7% in that year. Average pharmacist salaries for 2016 at hospitals grew by 1.5%, to $121,000.
[Click to Enlarge]

Note that the OES data exclude self-employed pharmacists and pharmacy owners. Based on industry survey data, the average pharmacist owning a single pharmacy earned about $200,000 in 2015 (the most recent year available). See New Data Show Prescription Profits Under Pressure at Independent Pharmacies . A pharmacy owner still makes more than an employed pharmacist—but the gap keeps shrinking.

THE OUTLOOK?

The 2016 data are consistent with key trends that I highlighted in two recent Drug Channels analyses:
For 2016, 14 of the top 15 most highly paid U.S. occupations were in healthcare. Among all BLS-ranked occupations, Pharmacist was the 43rd most highly paid occupation, right behind Astronomer and Physicist. (Go to https://www.bls.gov/oes/current/oes_nat.htm and sort by the Annual Mean Wage column.)

Today’s big question: Will pharmacists’ salary growth continue to lag behind the rest of healthcare?

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