Google has agreed to forfeit $500 million and to more tightly comply with laws surrounding online pharmacy advertising, after a Department of Justice investigation found it both allowed and helped Canadian pharmacies that were advertising and selling to U.S. consumers in violation of federal law.
The $500 million penalty is one of the largest in U.S. history. The DOJ says the amount represents the amount Google brought in from the illegal ads, as well as the amount that the Canadian pharmacies earned from the sales. Google has acknowledged the violation and agreed to some compliance and reporting to ensure it doesn’t happen again. (Note: See Google’s statement below.)
“This settlement ensures that Google will reform its improper advertising practices with regard to these pharmacies while paying one of the largest financial forfeiture penalties in history,” said Deputy Attorney General Cole in a statement.
The announcement by the Department of Justice comes after Google in May set aside $500 million to settle charges in a Justice Department probe. Subsequent reports tied the investigation to illegal pharmaceutical ads.
The Justice Department says Google, though it knew the practice was illegal, continued to allow Canadian pharmacies — while successfully blocking pharmacies from other countries — to advertise and sell prescription drugs to U.S. consumers. Importation of prescription drugs is illegal, because the imported drugs may not comply with Food and Drug Administration requirements. The DOJ found that Google also knew that some of these pharmacies dispensed prescriptions from online consultations, rather than a legitimate visit to a doctor.
Interestingly, the probe began via a separate, multi-million dollar financial fraud case. The suspect in that case fled to Mexico, and, while a fugitive, placed pharmaceutical AdWords on Google. When he was captured, he helped law enforcement officials by providing information about his use of the AdWords program. As part of the investigation, the government set up undercover online pharmacy sites, and advertised them on AdWords.
UPDATE: Google has released a statement: ”We banned the advertising of prescription drugs in the U.S. by Canadian pharmacies some time ago. However, it’s obvious with hindsight that we shouldn’t have allowed these ads on Google in the first place. Given the extensive coverage this settlement has already received, we won’t be commenting further.”