Abstract : This study aimed to analyze the capitation payment utilization and expenditure of drugcosts in public and private primary health care (PHC). This study was a cross-sectional study withquantitative approach of data collection that was done from January 2016 to December 2016 at 5 private and5 public PHC, evaluating utilization and expenditure data prescription cost in Yogyakarta city and Slemandistrict, Indonesia. We performed Mann-Whitney and Kruskal-Wallis analysis to determine differences inutilization and expenditure of drug cost between private and public PHC. The most prevalent diseases foundbased on the type of PHC was pulpitis (12.5%) while in private PHC was an acute upper respiratoryinfection (13.5%). Characteristic of patients visited was female (68%), 46-55 age group (17%). The costused in health services were IDR 16,093 (77%) for patient examination and services and IDR 5,097 (23%)for the drug. There were statistically difference for total cost of three diseases, includinghypercholesterolemia (p=0.008); acute upper respiratory infection (p= 0.023); and functional dyspepsia (p=0.015). The highest drug cost based on diseases was refractory anemia (IDR 18,885). The proportion of drugcost was about 23% of the total capitation fund received by PHCs. Drug costs in the capitation system at theprivate first level health facilities tend to be higher than in the public facilities. Moreover, it is lower than theinternational standard suggested by WHO. It is recommended to evaluate the capitation system especiallythe rational proportion of health expenditure to enhance the quality of care