PIP: Describes technology assessment and its application to the health field; examines evaluation of efficacy, safety, and cost effectiveness; discusses the use of technology assessment in policy formulation, especially by federal programs; suggests a system for assessment of medical technologies; and offers some observations about the future of technology assessment in policy making. Technology assessment began formally in 1965 in the Committee on Science and Astronautics of the House of Representatives as a process of examining technology and its impacts. Only a few attempts have been made since then to apply the concepts of technology assessment to health care. The amount of money currently devoted to assessing the efficacy and safety of medical technologies is small, and many important technologies have not been assessed. Priorities for clinical trials should therefore be set. Cost effectiveness analysis is a useful tool in decision making but because of its inherent limitations, it should not be the sole or even primary determinant of a decision. Technology assessment is apparently infrequently used as a decision-assisting tool by 3rd party payers, federal government agencies funding biomedical research, or the federal program which is designed to control physician utilization of certain technologies. Only the FDA regularly utilizes technology assessment. A systematic program of technology assessment would require identification of technologies needing testing, setting of priorities for such tests, synthesizing of information gained and its dessemination to decision makers.