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Google settles illegal drug ad probe for $500 million

One of the largest forfeitures in US history

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Google has agreed to pay $500 million to settle a US Department of Justice investigation into allegations that it allowed Canadian pharmacies to advertise on its US search engine, facilitating the illegal importation of controlled and non-controlled substances into the country.

In a statement released on Tuesday, the Department of Justice said that Google's $500 million forfeiture was one of the largest in United States history. The settlement covers the gross revenue Google received from the illegal advertisements and the gross revenue made by the Canadian pharmacies from sales to customers in the US.

The DoJ said that the shipment of prescription drugs from foreign pharmacies to customers in the US typically violates the Federal Food, Drug and Cosmetic Act and that such shipments of controlled prescription drugs run afoul of the Controlled Substances Act. According to the statement, Google was aware as early as 2003 that it was generally illegal for Canadian pharmacies to ship drugs into the US.

In 2003, after it was warned that foreign pharmacies were advertising on its US search engine, Google worked to block ads from pharmacies located in other countries but continued to allow ads from pharmacies based in Canada, according to the DoJ. The DoJ also said that from 2003 to 2009, Google provided customer support to Canadian pharmacies to help them place and optimize their US ads and improve the makeup of their websites.

“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 Cole in the 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."

In a statement sent to The Register, a Google spokesman said that "some time ago", the company banned Canadian pharmacies from advertising prescription drugs. "However, it’s obvious with hindsight that we shouldn’t have allowed these ads on Google in the first place," the statement continued. "Given the extensive coverage this settlement has already received, we won’t be commenting further.”

In May, Google said in an SEC filing that it had set aside $500m for a potential settlement with the Department of Justice involving the use of Google advertising by "certain advertisers", and The Journal later reported that this involved a criminal investigation into claims that it made hundreds of millions of dollars from ads purchased by illegal online pharmacies.

According to public documents, Google was warned repeatedly by US state and Canadian regulators and independent watchdogs that it was running ads from online pharmacies that were breaking US laws. The Journal also reported that undercover agents with the Food and Drug Administration contacted Google at one point, posing as employees of illegal online drug sellers. It's unclear what evidence this did or did not turn up. ®

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