Google Fined $500 Million For Illegal Drug Ads

Google has agreed to pay a penalty of $500 million for carrying advertising from Canadian pharmacies that illegally offer drugs to US customers. The fine will allow the company to avoid criminal charges over the issue.

It is illegal to ship drugs into the US from outside the country as such medicines -- even when they are prescription drugs -- are not verified by the Food and Drug Administration (FDA).

In the case of Canadian distributors, drugs shipped overseas also evade local regulation. In some cases such drugs may have been made outside of North America and have had no quality controls.

Ads Date Back Eight Years

The Department of Justice says that Google was aware as early as 2003 that Canadian firms were advertising to US Google users and that this was illegal. Although Google blocked ads from firms outside of North America, it continued taking ads from Canadian suppliers until 2009. (Source: justice.gov)

At that point, Google tightened up its controls of online pharmacy advertising and required that advertisers be certified by the National Association of Boards of Pharmacy. That ruled out Canadian advertisers by default as the association only deals with US pharmacies.

The investigation that led to the fine was actually sparked by a US fugitive who moved to Mexico and began placing ads on Google. During an undercover investigation by the US government, it became clear Google had profited from the illegal advertising from both Canada and other countries.

Fine Covers Advertising, Drug Profits

The huge fine was calculated to cover not only the profits Google made from carrying the advertisements, but also the profits made by the advertisers themselves from supplying the drugs. The fact that Google has agreed to effectively carry the financial burden for the activities of drug suppliers shows how badly it fears criminal prosecution.

In a recent statement, Google said of the fine that, "We banned the advertising of prescription drugs in the US by Canadian pharmacies some time ago. However, it's obvious with hindsight that we should not have allowed these ads on Google in the first place."

The $500 million figure has clearly been under discussion for some time as a financial statement by the company in May noted that amount had been set aside for a government investigation. (Source: bbc.co.uk)

As well as paying the fine, Google will have to take part in unspecified "compliance and reporting measures."