Google to pay $500M to settle DOJ pharma ads charges

IDG News Service - Google has agreed to pay $500 million to settle allegations from the U.S. government that it let online pharmacies in Canada use its AdWords system to advertise prescription drugs to U.S. consumers, resulting in illegal importation of the medicines into the U.S.

"The forfeiture, one of the largest ever in the United States, represents the gross revenue received by Google as a result of Canadian pharmacies advertising through Google's AdWords program, plus gross revenue made by Canadian pharmacies from their sales to U.S. consumers," the U.S. Department of Justice said in a statement on Wednesday.

According to the DOJ, Google became aware as early as 2003 that the shipment of prescription drugs from abroad, and specifically from Canada, to U.S. residents is usually illegal, potentially violating several statutes, including the Controlled Substances Act, and endangering the health and safety of consumers. Yet, Google didn't attempt to modify its practices until 2009, after it became aware that it was being investigated by the U.S. government, the DOJ 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 DOJ statement reads.

In response, Google said that it stopped selling ad space to 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," Google said in a statement.

Google had disclosed months ago that it was setting aside $500 million to potentially settle a U.S. government investigation into its advertising practices.

As part of the settlement, Google admits improperly assisting Canadian online pharmacy advertisers on running ads to target U.S. consumers via AdWords, the DOJ said. The agreement also establishes "compliance and reporting measures" Google must adopt to make sure it doesn't again engage in this type of advertising practices, according to the DOJ.