BACKGROUND: The Japanese generic drug market is not well developed. The generic volume share is 20% of the total market vs. 74% and 64% in the USA and UK. The slow uptake of generics is often explained by the “Brand Lover” profile of Japan. No formal review of drug policy has been undertaken to understand the slow uptake of generics. OBJECTIVES:  To review the current Japanese drug policy regarding generic drugs and to appreciate the incentive and disincentive to use generic. METHODS: We reviewed the current Japanese generic drug policy enacted by the Ministry of Health, Labour and Welfare (MHLW), and the Japanese Generic Medicines Association’s website. RESULTS: Major policies to enhance generic uptake were issued in 2002, 2006 and 2010. They required that prescriptions specify if substitution generics are acceptable, and provide some modest financial incentives for pharmacies and hospitals to substitute only with the patient’s agreement. In 2012, INN prescription is encouraged but not requested. The recent introduction of Japanese DRG hospital funding, and the 2011 Japan-India Economic Partnership Agreement, which opened the Japanese market to Indian generic drug manufacturers, are expected to boost the generic market. However, small pricing gaps between generic and branded drugs, the lack of mandatory substitution and INN prescription, little price discounting and little education towards the public might explain the slow uptake of generics in Japan, relative to the West. CONCLUSIONS: Although the “Brand Lover” assumption is candidly used to explain the lack of traction by generic drugs, this review finds the lack of policy incentives to boost generic adoption, better explain current levels of generics penetration. Shall the authorities be willing to encourage generic uptake more effective policy incentive are needed.