Issuing a mea culpa, Google (NASDAQ:GOOG) has agreed to forfeit $500 million for allowing online Canadian pharmacies to place ads through its AdWords program that targeted US consumers and, ultimately, caused medicines to be imported illegally, according to the US Department of Justice, which calls this one of the biggest forfeitures ever.
How did they arrive at $500 million? The amount represents the gross revenue received by Google thanks to Canadian pharmacies advertising through AdWords, plus gross revenue made by Canadian pharmacies from their sales to US consumers. Shipping meds from pharmacies to US consumers from other countries usually violates federal law, including the Controlled Substances Act.
According to the feds, the US Attorney in Rhode Island and the FDA’s OCI’s put Google on notice that online Canadian pharmacies were advertising prescription drugs to Google users in the US through its AdWords. But while Google took steps to block pharmacies in countries other than Canada from advertising, Google continued to allow Canadian pharmacies to target US consumers.
The feds also charge Google was aware that many of the online pharmacies distributed controlled prescription drugs and did so based on an online consultation rather than a valid prescription. Google was also told that many pharmacies accepted online consults rather than prescriptions because they charged a premium, since consumers lacking a valid prescription were willing to pay higher prices. Moreover, Google provided customer support to some Canadian online pharmacies to assist them in placing and optimizing AdWords ads and improving the effectiveness of their websites.
“The result of this investigation has been a fundamental transformation of Internet pharmacy advertising practices, significantly limiting promotion to US consumers by rogue online pharmacies,” says Kathleen Martin-Weis, acting director of the FDAS Office of Criminal Investigations in a statement. We have left word with Google and will update you accordingly.
The issue reflects an ongoing effort by the FDA and the pharmaceutical industry to eradicate importation, citing safety concerns over manufacturing and shipping, as well as counterfeiting (look here).
However, consumer advocates and some politicians say importation is needed due to the high cost of some meds. Two years ago, in fact, the Obama White House made some noise about allowing imported meds (read here) and, earlier this year, two US Senators introduced a bill to allow importation, but the effort has not gained traction (see this).