OBJECTIVES: The margin between the price of a drug and its reimbursement price (yakkasa) is determined by negotiation between wholesalers and medical institutions in Japan. The Ministry of Health, Labour and Welfare (MHLW) claims that the yakkasa reflects the market value of drugs. Factors, however, influencing the yakkasa have not been clarified. The aim of this study was to investigate the current status and determinants of the yakkasa of generic drugs. METHODS: The reimbursement price of a drug, which is determined by the MHLW in Japan, decreases in proportion to the yakkasa every two years. To calculate the yakkasa, we used the drug price lists of 2006, 2008, and 2010. We identified generic drugs with a higher percentage margin for each year, and averaged the yakkasa by drugs. We then investigated longitudinal trends in the range of the yakkasa. Furthermore, we explored factors associated with the larger percentage margin. RESULTS: The generic drugs with a higher percentage margin were: doxazosin mesilate (30.7%), famotidine (29.7%), and manidipine hydrochloride (29.6%) in 2006; ofloxacin (31.1%), cetirizine hydrochloride (27.4%), and actarit (25.8%) in 2008; and ofloxacin (24.1%), cetirizine hydrochloride (23.2%), and levofloxacin (22.5%) in 2010. The yakkasa was correlated with the logarithmic capital of generic manufacturers, i.e., generic drugs developed by larger companies had smaller margin. The coefficient of variance for the yakkasa decreased every two years with the revision of drug prices. CONCLUSIONS:  The generic drugs prescribed frequently or developed recentlyhad a higher percentage margin. The relationship between the yakkasa and capital might signify the fact that more competitive manufacturers tend to paysmaller margin, since medical institutions have no incentive to buy drugs from smaller manufactures, unless the margin is larger.