Google Ponies up $500m in Fines for Allowing Illegal Drug Advertising

In a move that could be a tremendous boon to legitimate U.S. pharmacies, Google was smacked down hard by the Food and Drug Administration (FDA) Office of Criminal Investigations and the U.S. Department of Justice (DOJ). In one of the largest forfeitures, Google has agreed to pony up a whopping $500 million for allowing online pharmacies based in Canada to advertise to American consumers through its AdWords program, which resulted in a lucrative illegal prescription drug trade. As part of the agreement, Google admitted that they improperly assisted the online pharmacies to advertise illegal sales and agreed to establish compliance and reporting measures to prevent future transgressions.

 The amount of the settlement equals the gross revenue that Google raked in from the advertising plus the amount of sales profit taken by the online Canadian pharmacies as a direct result. Maybe this seems a bit harsh, until you start thinking about what went on here. As early as 2003, Google was “officially” aware that it is illegal for pharmacies to send prescription drugs into the U.S. from other countries and took steps to block advertising from online pharmacies located in other countries. Inexplicably, they did not block such advertising from Canada. Not only did Google continue to allow Canadian advertising, which fostered violations of the Federal Food, Drug and Cosmetic Act and the Controlled Substances Act, but they provided the tools and support to help the companies improve their exposure and maximize returns. To be fair, these tools and support are open to all AdWords customers as part of Google’s package, but in this instance, it certainly seems like “aiding and abetting.”

There are a number of issues with online Canadian pharmacy operations. In 2005, the FDA discovered that pharmacies claiming to be Canadian were actually sourcing from 27 other countries worldwide. So people who thought they were ordering from Canada might be receiving packages from anywhere. This is important, given the volume of counterfeit drugs flooding the online market. Since Canada is not high on the list of countries run by drug cartels, consumers tend to place more faith in our neighbor to the north than in, say, Mexico, with its history of drug violence.

Aside from the possibility of counterfeit drugs, imported drugs may not be thoroughly tested and approved by the FDA, and may not meet U.S. standards for manufacture, storage, labeling, and distribution. Canadian pharmacies that ship drugs to the U.S. are not subject to Canadian prescription drugs regulations.

Some lawmakers on both sides of the political aisle are trying to lift the restrictions on drug imports, a move they calculate will lower drug prices. The bill is currently in front of the Senate. Given all the press about fake drug imports, do you think this would be a wise move? How would legalizing prescription drug imports from other countries impact your business? And what about the Google decision? Fair or excessive? You tell me.