Google Agrees to Pay $500M in Online Ad Settlement

Kate H. Gamble, Senior Editor
Published Online: Wednesday, August 31, 2011
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Google Inc. has agreed to pay $500 million to settle charges from the federal government that it has knowingly shown illegal ads for fraudulent Canadian pharmacies in the United States.

A federal investigation found that Google accepted advertisements from Canadian pharmacies that failed to require a prescription for drugs such as narcotic pain relievers and stimulants. Google continued to accept their money and assisted the pharmacies in placing ads, according to the Justice Department. The fine, one of the largest ever in the United States, represents the gross revenue received through Google’s AdWords program, plus gross revenue made by Canadian pharmacies from their sales to US consumers.

“The Department of Justice will continue to hold accountable companies who in their bid for profits violate federal law and put at risk the health and safety of American consumers,” said Deputy Attorney General James M. Cole, in a statement. “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.”

Illegal online pharmacies have presented a challenge for regulators, because the Internet makes it easy for them to operate under the radar and emerge under different names when they get shut down, according to a New York Times article. Search engines like Google drive much of the traffic to these sites, and are therefore liable for advertising that breaks federal criminal law.

According to the Justice Department, Google was aware as early as 2003, that generally, it was illegal for pharmacies to ship controlled and non-controlled prescription drugs into the United States from Canada.

The company said in a statement that it should not have allowed Canadian pharmacies to market prescription drugs to American consumers.
"We banned the advertising of prescription drugs in the U.S. by Canadian pharmacies some time ago," Google's spokesperson stated. "However, it's obvious with hindsight that we shouldn't have allowed these ads on Google in the first place."

Under the settlement, Google also acknowledged that it had improperly aided the rogue pharmacies, and it agreed to strict compliance measures.

The Justice Department’s decision was applauded by the National Association of Chain Drug Stores (NACDS). In a recent statement, NACDS President and CEO Steven C. Anderson, IOM, CAE, said the organization “is pleased that Google Inc. is taking steps to rectify the advertising activities of these illegal online drug sellers,” and expressed gratitude that the issue was being resolved.

“Illegitimate Internet drug sellers pose incredible risks to patients. These rogue websites operate in clear violation of US state and federal laws and regulations. They sell drugs to consumers without the safety of precautions of a legitimate prescriber-patient relationship, a valid prescription, and a licensed US pharmacy,” said Anderson. “NACDS supports targeting illegal Internet drug sellers through the chokepoint approach. This approach gives authority to key players throughout the process—website domain name registrars, financial entities that handle payments, Internet service providers, and carriers providing mailing services—to stop illicit transactions at their point of interaction with these rogue entities. NACDS also recognizes the recent efforts by Google to make the Internet safe for consumers through the use of the chokepoint approach.”

For more information, click on the links below:
  • Google settles pharmacy ad probe for $500 million (AP)
  • Google Reaches $500 Million Settlement With Government (New York Times)
  • Google Forfeits $500 Million Generated by Online Ads & Prescription Drug Sales by Canadian Online Pharmacies (US Department of Justice)

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