Objective: Political objectives may alter economic rationale in health care decision-making. The Hungarian government had promised to reduce the prices and copayment of pharmaceuticals, therefore 15% price cut was mandated to all reimbursed pharmaceuticals from April 2004. Three months later the regulation was abrogated by the Constitution Court. As the government did not want to communicate a price increase, the level of copayment remained the same, while the reimbursement level was increased. It took two years to increase the copayment back to the original level by a 7.5% reimbursement reduction in February 2005, and by a further 7.5% reduction from February 2005 to July 2006. Our objective was to measure the impact of price cut on the public pharmaceutical budget. Methods: An estimated public pharmaceutical spending was calculated based upon projections from the expenditure in previous periods. Only pharmaceuticals with reimbursement in April 2004 were included into the analysis. The estimated expenditure was compared to the real expenditure. Hungarian Forint was converted to US$ by employing the quarterly exchange rate. Results: In Q2 2004 the mandated price cut resulted in $39.65 million savings in the pharmaceutical expenditure. In Q3-Q4 2004 the reduced copayment generated $29.98 million increase in the drug budget. Between Q1 2005 and Q2 2006 the impact of reduced copayment was $42.42 million. Conclusion: The mandated price cut and its subsequent abrogation resulted in $32.75 million increase in the Hungarian public pharmaceutical expediture between April 2004 and June 2006, as the government did not dare to withdraw its promise on cheaper pharmaceuticals. Our estimate is conservative, as the mandated price cut influenced spending not only on pharmaceuticals with reimbursement in April 2004, but via reference pricing also the spending on new pharmaceuticals with initial reimbursement between April 2004 and June 2006.