China's corruption probe gathered more steam Wednesday with news of the arrest of a British investigator who reportedly worked with pharma companies, including GlaxoSmithKline ($GSK). It's the latest indication that GSK was just the first target of China's investigation, which is sweeping across the industry amid the country's attempts to lower healthcare costs.
Peter Humphrey and his wife Yu Yingzeng, a U.S. citizen, were arrested August 19, Reuters says, citing statements from the British Embassy in Beijing and family members. The couple, who co-founded a business risk advisory company that sources say worked with GSK, was initially detained July 10. As the news service points out, an arrest signifies that the police now think they have enough evidence for a case to be brought to trial.
A Reuters source said Humphrey's family has not yet been told which charges he would face or when. However, lawyers previously told family members that he was detained on suspicion of breaking a law related to buying private information. According to The Wall Street Journal, Humphrey, a former Reuters reporter, is "among the better-known private corporate investigators in China."
"We only know that Ying and Peter did investigative work on corruption within foreign companies," the statement from family members said, as quoted by the Journal. "As corruption is high on the schedule of China's government, the incarceration of Ying and Peter seems to be contradictory to China's policy in itself."
Still, it's unclear whether the arrest directly relates to the ongoing investigation of Glaxo, which China has accused of bribing Chinese doctors and officials by shuttling up to $489 million through travel agencies. What is clear is that China's crackdown on corruption and high prices in the pharma industry is not stopping here.
China is toughening its stance on underhanded practices in the industry as it looks to broaden healthcare access. As Reuters reports, the country is up against an estimated $1 trillion healthcare bill by 2020. But the bribery investigation has already resulted in at least some lowered costs: Glaxo's emerging markets chief, Abbas Hussain, promised price cuts for the company's drugs after admitting GSK's execs in China had probably broken the law there. Since then, other companies like Novartis ($NVS) and Sanofi ($SNY) have come under fire for bribery allegations. Depending on what Chinese officials dig up, that cost-cutting trend might continue.
Editor's note: This story has been updated with information and a quote from The Wall Street Journal.