Google Inc. has agreed to forfeit $500 million for allowing Canadian pharmacies to place advertisements on the online search engine targeting U.S. consumers, who unlawfully imported controlled and non-controlled prescription drugs into the United States.
Deputy Attorney General James M. Cole on Wednesday described the forfeiture as one of the largest ever in this country, adding that it represents the gross revenue received by Google as a result of Canadian pharmacies advertising through Googles AdWords program, plus gross revenue made by Canadian pharmacies from their sales to U.S. consumers.
"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," said Mr. Cole.
Justice Department officials said the shipment of prescription drugs from pharmacies outside the U.S. to customers in this country typically violates the Federal Food, Drug and Cosmetic Act and, in the case of controlled prescription drugs, the Controlled Substances Act. They said Google was aware as early as 2003 that it was generally illegal for pharmacies to ship prescription drugs into the U.S. from Canada.
U.S. Attorney Peter F. Neronha in Rhode Island said the investigation was about "the patently unsafe, unlawful, importation of prescription drugs by Canadian on-line pharmacies, with Googles knowledge and assistance, into the United States, directly to U.S. consumers."
He said the agreement holds Google responsible for its conduct by imposing a $500 million forfeiture, "the kind of forfeiture that will not only get Googles attention, but the attention of all those who contribute to Americas pill problem."
The importation of prescription drugs to consumers in the U.S. is almost always unlawful because the FDA cannot ensure the safety and effectiveness of foreign prescription drugs, Justice Department officials said.
They said the drugs also may not meet FDAs labeling requirements; may not have been manufactured, stored and distributed under proper conditions; and may not have been dispensed in accordance with a valid prescription.
While Canada has its own regulatory rules for prescription drugs, the officials said Canadian pharmacies that ship prescription drugs to U.S. residents are not subject to Canadian regulatory authority, and many sell drugs obtained from countries other than Canada that lack adequate pharmacy regulations.
An investigation by Mr. Neronha's office and the FDA's Office of Criminal Investigations (OCI) found that, as early as 2003, Google was on notice that online Canadian pharmacies were advertising prescription drugs to Google users in the U.S. Although Google took steps to block pharmacies in countries other than Canada from advertising in the U.S., they said the company continued to let Canadian pharmacy advertisers target U.S. consumers.
The officials said Google was aware that many Canadian pharmacies distributed prescription drugs, including controlled drugs, based on an online consultation rather than a valid prescription from a medical practitioner.
They also said Google knew many Canadian pharmacies charged a premium for accepting online consultation rather than a prescription because those seeking prescription drugs without a valid prescription were willing to pay higher prices for the drugs.
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