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Many authorities now advocate that the first-line assessment of thyroid function should be measurement of thyrotropin (TSH). The latest serum TSH assays (third generation) are more sensitive than the second generation but the reagents are more costly. We have examined whether overall assay reagent costs would be higher or lower with a third-generation assay, in a laboratory that serves a population of almost 500,000. In a prospective study over six weeks, 505 samples with a second-generation serum TSH less than 0.5 mU/L (303 for screening and 202 for monitoring thyroxine therapy) had an additional third-generation TSH analysis. With a second-generation assay for screening, 11% more free thyroxine (FT4) measurements were required to exclude thyrotoxicosis but there was a 42% saving on the reagent budget compared with a third-generation assay. In patients taking thyroxine, 33% more FT4 measurements were required to exclude over-replacement but the calculated saving in reagent costs was 53%. The costs of all other aspects of the two methods were similar. In this community-based sample, the improvement in sensitivity yielded by the third-generation assay at the lower end of the normal range reduced the number of confirmatory FT4 levels required to exclude thyrotoxicosis or over-replacement with thyroxine, but reagent costs were nevertheless higher than for second-generation assays. In financial terms, there is little justification for use of assays with sensitivity greater than the second generation (0.1 mU/L).