An exploratory study assessing the economic consequences of inadequate prescribing by health-care providers was carried out in two cities of Chiapas State, South Mexico. Two research methods were used: (a) an exit survey with pharmacy users (1190 interviews) and (b) in-depth individual interviews with patients at hospital level (19 interviews). For comparative purposes, three tracer conditions were selected: acute respiratory infection (ARI), diarrhoeal disease (DD) and hypertension. The main findings were that doctors, drug vendors at pharmacies, traditional healers, users of health-care services themselves (through self-prescription) and other health staff are all sources of inadequate prescribing and impose a substantial economic burden of unnecessary cost on health-care users. In general, treatment costs were high compared with standard treatments, and prescriptions included a high proportion of non-essential drugs (50-64%). Additional costs to the standard treatment were particularly high when the prescription was by a medical doctor (US$ 3.57 per ARI prescription and US$ 8.37 for DD). Losses attributable to inadequate prescribing averaged US$ 47 per patient. The study concludes that training programmes on rational drug use aimed exclusively at medical doctors can only have a limited effect in reducing economic losses due to inadequate prescribing. Such efforts should be extended to other providers who are very active in prescribing drugs and providing health advice. The main challenge that the Mexican health system will be facing in the foreseeable future is not only to improve equity of access to essential drugs, but also to improve quality of drug advice and prescription and rational use of drugs by the population.