DOJ: Google coughs up $500 million over Canadian pharmacy ads

Google settles with the Department of Justice for $500 million for enabling Canadian pharmacies to target U.S. consumers.

The U.S. Department of Justice said Wednesday that Google will forfeit $500 million in AdWords proceeds related to online Canadian pharmacies.

In a statement, the DOJ said Google's forfeiture was the largest by a U.S. company.

Specifically, Google is forfeiting $500 million in gross revenue related to Canadian pharmacies selling their wares to U.S. consumers.

The shipment of prescription drugs from outside the U.S. to consumers is against the law. The DOJ said:

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.

U.S. consumers go to Canadian pharmacies because they are a less expensive way to get U.S. prescription drugs. The DOJ argues that procuring drugs from Canadian pharmacies is against the law because they skirt Food and Drug Administration (FDA) regulations as well as Canada's regulators.

The Deputy Attorney General James Cole said:

"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."

The DOJ said that Google knew it was on notice about Canadian pharmacies using AdWords. The DOJ added:

Although Google took steps to block pharmacies in countries other than Canada from advertising in the U.S. through AdWords, they continued to allow Canadian pharmacy advertisers to target consumers in the United States. Google was aware that U.S. consumers were making online purchases of prescription drugs from these Canadian online pharmacies, and that many of the pharmacies distributed prescription drugs, including controlled prescription drugs, based on an online consultation rather than a valid prescription from a treating medical practitioner. 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.

Further, from 2003 through 2009, Google provided customer support to some of these Canadian online pharmacy advertisers to assist them in placing and optimizing their AdWords advertisements, and in improving the effectiveness of their websites.

In 2009, when it was clear that Google was being investigated by Rhode Island and the FDA, it moved to clamp down on Canadian pharmacies to verify advertisers were legit.

Under the settlement agreement, Google acknowledges that it assisted Canadian online pharmacies and is responsible for its conduct. Google will also submit to "compliance and reporting measures" to ensure that it is keeping up with what is required by the DOJ.

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