Google to Pay $500 Million Dollar Settlement in Canadian Drug Ad Inquiry

  • By: Staff Editor
  • Date: August 26, 2011
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Google has agreed to pay $500 million dollars as a settlement in a Department of Justice inquiry into whether the search engine’s ads for online Canadian pharmacies led to illegal import of prescription drugs.

In 2003, Google, Yahoo! and Microsoft had all banned such ads following an FDA crackdown on the practice. However, in 2004, Google allowed Canadian pharmacies to once again place ads through its AdWords service, even providing advice on how to optimize their ads and improve their websites.

The company acknowledges the illegality of its activities in statement, saying that

“While we banned the advertising of prescription drugs in the US by Canadian pharmacies some time ago, it’s obvious with hindsight that we shouldn’t have allowed these ads on Google in the first place.”


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In addition to paying $500 million, Google has agreed to take a number of remedial steps that are outlined in the Agreement.  These steps are intended to prevent online foreign pharmacies from using AdWords to advertise to U.S. customers.

Department of Justice and FDA inquiry

The Department of Justice along with the FDA’s Office of Criminal Investigations opened an inquiry into the issue in 2009. The Non-Prosecution Agreement released following Google’s agreement to pay the settlement, says that once Google became aware of the government’s inquiry, it required online pharmacies to engage the National Association of Boards of Pharmacy to certify that online pharmacies seeking to advertise on AdWords were accredited through its Verified Internet Pharmacy Practice Sites (“VIPPS”) program. 

According to the Agreement, the VIPPS program conducts site visits as part of the its certification process, has “stringent standards” against the issuance of prescriptions based on online consultations, and does not certify Canadian online pharmacies.  Google also hired a third-party company to detect pharmacy advertisers’ attempts to exploit flaws in the AdWords screening system designed to prevent foreign online pharmacies from advertising to U.S. customers without Google’s knowledge.
In 2010, Google had filed a lawsuit against “advertisers we believe have deliberately broken our rules,” in particular involving “rogue online pharmacies” that “illegally sell drugs on the Web.” 

The company also said that “rogue pharmacies are bad for our users, for legitimate online pharmacies and for the entire e-commerce industry—so we are going to keep investing time and money to stop these kinds of harmful practices.”

FDA violations

The FDA has banned the sale of prescription drugs from foreign countries because the safety and efficacy of these drugs cannot be verified. "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.

According to the DOJ, the main concern about the Canadian online drugstores was that they failed to require a prescription but accepted an "online consultation" to dispense pharmaceuticals.

"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.

The FDA has been aggressively pursuing online ads for prescription drugs that violate the agency’s regulations. In 2009, the FDA had warned 14 major pharmaceutical companies about brief Internet ads that accompany searches on Google and other search engines, saying the ads were misleading because they didn't include risk information.

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