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This study aimed to analyze the capitation payment utilization and expenditure of drug costs in public and private primary health care. This study was a cross-sectional study with a quantitative approach in Yogyakarta province, Indonesia. The most prevalent diseases found based on the type of primary health care was pulpitis (12.5%) while in private primary health care was an acute upper respiratory infection (13.5%). Characteristic of patients visited was female (68%), 46-55 age group (17%). The cost used 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, including hypercholesterolemia (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 drug cost was about 23% of the total capitation fund received by PHCs. Drug costs in the capitation system at the private first level health facilities tend to be higher than in the public facilities. Moreover, it is lower than the international standard suggested by WHO. It is recommended to evaluate the capitation system especially the rational proportion of health expenditure to enhance the quality of care.