Federal agencies have long been required to conduct benefit-cost analyses to determine whether the merits of regulations justify the costs of their implementation.  In 2003, the U.S. Office of Management and Budget (OMB) instituted a new requirement: for any major regulation (with costs or benefits greater than $100 million) that affects health or safety, agencies must also estimate its cost-effectiveness.

At the request of OMB and several federal agency sponsors, the IOM Committee to Evaluate Measures of Health Benefits for Environmental, Health, and Safety Regulation developed guidance on how best to conduct cost-effectiveness analyses in the regulatory context.

The report of the committee, Valuing Health for Regulatory Cost-Effectiveness Analysis, reviews and makes recommendations for using integrated measures of morbidity and mortality (such as quality-adjusted life years, or QALYs); reporting cost-effectiveness ratios; and data and research needs to improve regulatory cost-effectiveness analysis. It also considers the ethical implications of using cost-effectiveness analysis, and integrated measures of health impact, in regulatory policy development.