We studied how the separation of dispensing and prescribing of medicines between pharmacies and clinics (the "separation system") can reduce internal medicine costs. To do so, we obtained publicly available data by searching electronic databases and official web pages of the Japanese government and non-profit public service corporations on the Internet. For Japanese medical institutions, participation in the separation system is optional. Consequently, the expansion rate of the separation system for each of the administrative districts is highly variable. The data were subjected to multiple regression analysis; daily internal medicines were the objective variable and expansion rate of the separation system was the explanatory variable. A multiple regression analysis revealed that the expansion rate of the separation system and the rate of replacing brand name medicine with generic medicine showed a significant negative partial correlation with daily internal medicine costs. Thus, the separation system was as effective in reducing medicine costs as the use of generic medicines. Because of its medical economic efficiency, the separation system should be expanded, especially in Asian countries in which the system is underdeveloped.