Google to settle pharmacy ad investigation for $500 mln

Google will pay $500 million over enabling Canadian pharmacies to target U.S. consumers with discount drug offers.

At a news conference this morning in Rhode Island, U.S. attorney Peter F. Neronha announced that Google has agreed to pay $500 million for improperly enabling Canadian pharmacies to use Google advertising services to target U.S. consumers with discount drug offers. According to Neronha, the settlement is the largest of its kind in U.S. history—and the figure stems partly from Google parting with revenue it earned from Canadian pharmacies participating in Google’s AdWords program. Unlike many settlements, in this case Google is actually admitting to wrongdoing: the company acknowledges that it improperly assisted Canadian pharmacies in selling drugs to U.S. citizens.

Importing prescription drugs into the U.S. is generally illegal since federal regulators cannot monitor and ensure the safety of the medications. In this case, investigators determined selected Canadian pharmacies illegally imported drugs into the United States, and did so with “Google’s knowledge and assistance.”

“This investigation is about the patently unsafe, unlawful, importation of prescription drugs by Canadian on-line pharmacies, with Google’s knowledge and assistance, into the United States, directly to U.S. consumers,” said Neronha, in a statement.. “It is about taking a significant step forward in limiting the ability of rogue on-line pharmacies from reaching U.S. consumers, by compelling Google to change its behavior.”

The investigation, spearheaded by the U.S. Attorney’s Office in Rhode Island and the FDA/OCI Rhode Island Task Force found that Google knew Canadian pharmacies were advertising prescription drugs to Google users in the U.S. via AdWords as early as 2003. Moreover, while Google actively worked to prevent pharmacies in other countries (like Mexico) from targeting consumers in the United States, the company continued to allow Canadian pharmacies to advertise to U.S. consumers. Further, Google gave customer support to some Canadian pharmacies from 2003 through 2009, assisting them in placing and optimizing their advertisements and improving the page rankings of their Web sites.

In addition to admitting wrongdoing and paying $500 million, Google has also agreed to a series of compliance and reporting requirements to ensure similar things don’t happen in the future.