×

High drug prices bring forth innovation: Scangos

The JPMorgan Health Care Conference kicked off amid new mergers and acquisitions and fresh breakthroughs in the health care industry. Despite new findings, the biotech sector struggled to hold higher Monday.

While rising drug prices have made some investors hesitant to allocate resources in the sector, biotech companies are defending the increases by pointing toward innovation.

"I think it's interesting to look backwards because we have raised our prices of drugs, and we did use that money to bring forth new compounds," said George Scangos, Biogen CEO, speaking to CNBC's "Closing Bell" on Monday.

Biogen, best known for its multiple sclerosis medicine, has utilized the revenues from older treatments to bring forth compounds such as Tysabri, Tecfidera and Plegridy, Scangos said. He maintains that multiple sclerosis patients are "better off as a result."

Biogen is now funding projects on Alzheimer's disease with revenues generated by multiple sclerosis drugs, Scangos says.

"There should be no confusion that drug prices are related to innovative new drugs, and that some control on drug pricing or pressure on drug pricing that forces them down will slow the flow of new drugs," he said.

While investors may be concerned with the biotech company sailing into a new market with its Alzheimer's project, Scangos said Biogen is carrying out the projects in a "thoughtful way" where the "potential benefits certainly outweigh the risks."

In the third-quarter Biogen beat both earnings and revenues, and Tecfidera revenues saw an increase of 6 percent, according to a Zack's analyst report.