Google to pay $500 million over online drug ads

WASHINGTON Wed Aug 24, 2011 5:37pm EDT

One of the business sites of Google is shown on a computer screen in Encinitas, April 13, 2010. REUTERS/Mike Blake

One of the business sites of Google is shown on a computer screen in Encinitas, April 13, 2010.

Credit: Reuters/Mike Blake

WASHINGTON (Reuters) - Google Inc has agreed to pay $500 million to settle a criminal probe into ads it accepted for online Canadian pharmacies selling drugs in the United States, the U.S. Justice Department said on Wednesday.

The advertisements led to illegal imports of prescription drugs into the country, the Justice Department said.

The forfeiture is one of the largest ever in the United States, according to the department. It represents Google's revenue from Canadian pharmacy advertisements to U.S. customers through Google's AdWords program and Canadian pharmacies' revenue from U.S. sales.

Google had previously set aside that amount for a possible settlement over its advertising practices, according to a regulatory filing in May.

Google, the world's No. 1 Internet search engine, had $29 billion in gross revenue in 2010.

One Justice Department concern was that some Canadian online drugstores failed to require a prescription but accepted an "online consultation" to dispense pharmaceuticals, the department said.

"Google was also on notice that many pharmacies accepting an online consultation rather than a prescription charged a premium for doing so because individuals seeking to obtain prescription drugs without a valid prescription were willing to pay higher prices for the drugs," the department said.

Another question was ensuring the drugs' safety, the department said.

"While Canada has its own regulatory rules for prescription drugs, Canadian pharmacies that ship prescription drugs to U.S. residents are not subject to Canadian regulatory authority, and many sell drugs obtained from countries other than Canada which lack adequate pharmacy regulations," the Justice Department said.

Google at one time accepted advertising from overseas online pharmacies but later confined such ads to those from the United States and Canada.

Google announced in a February 2010 blog post that it would no longer allow Canadian pharmacies to advertise to U.S. customers.

"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," the company said in a brief statement.

The drug and biotech trade group Pharmaceutical Research and Manufacturers of America was pleased with the settlement. Vice President Karl Uhlendorf said it "confirms the high risks associated with purchasing medicines over the Internet."

In addition to the financial settlement, the agreement sets compliance and reporting measures which Google must take.

(Reporting by Jeremy Pelofsky, Alexei Oreskovic and Diane Bartz; Editing by Tim Dobbyn and Matthew Lewis)

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Comments (8)
jane33w wrote:
When it first started out, Google had a motto of “Never be evil.” The corporate goons who came in when Google began to make real money, made damn sure the Google founders got such stupid, unprofitable ideas out of their young foolish naive heads.

Aug 24, 2011 2:38pm EDT  --  Report as abuse
Who is evil, Google which helped people to buy prescription medication for less than the outrageously exorbitant prices charged by Big Pharma or Big Pharma, which has, by this action, successfully blocked U. S. consumers from buying their medication outside of the U. S. and has by their lobbying efforts prevented Medicare from negotiating lower drug prices?

Aug 24, 2011 3:43pm EDT  --  Report as abuse
EN3 wrote:
It is a crime that Google should have to pay for this. Pharmaceutical companies over charge Americans an add significant unnecessary cost to healthcare in the US. The same drug manufactured in the same factory is sold for half the price in Canada, and even less in third world countries. The FDA’s complacency with big Pharmaceutical s is appalling. We need significant regulations for pharmaceuticals and obama’s healthcare plan does not nearly address this enough. Google is big but the pharmaceutical industry is even bigger and they don’t want anyone or, any company muscling on their proffits…

Aug 24, 2011 4:00pm EDT  --  Report as abuse
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