This paper discusses the challenges facing health technologyassessment (HTA) in Europe, based on an explicit analysis of thecharacteristics of an “optimal” HTA system. It has threeobjectives: a) to elaborate an explicit system of policy goals andthe characteristics of an optimal HTA system thatfacilitates the achievement of these goals; b) to identify thegeneral institutional incentive barriers (government and marketfailures) that prevent the attainment of an optimal HTAsystem in Europe; and c) to argue that evaluation of theimplications of health technologies for equity and inequality inhealth is an essential part of this optimal system and aconsiderable challenge for HTA decision makers, especially asnational governments realign policy toward equity goals.