Google Forfeits $500M for Canadian Pharma Ads that Resulted in Illegal Imports
On August 24, 2011, the Justice Department announced that Google Inc. has agreed to forfeit $500 million for allowing online Canadian pharmacies to place advertisements through its AdWords program targeting consumers in the U.S., which resulted in the unlawful importation of controlled and non-controlled prescription drugs into the U.S.
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Shipment of Prescription Drugs from Foreign Pharmacies to U.S. Customers is Almost Always Illegal
The shipment of prescription drugs from pharmacies outside the U.S. to customers in the U.S. typically violates the Federal Food, Drug and Cosmetic (FD&C) Act, and in the case of controlled prescription drugs, the Controlled Substances Act. DOJ states this is because the Food and Drug Administration cannot ensure the safety and effectiveness of foreign prescription drugs that are not FDA-approved as the drugs may not meet FDA’s 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, Canadian pharmacies that ship prescription drugs to U.S. residents are not subject to Canadian regulatory authority. Many of these pharmacies also sell drugs obtained from countries other than Canada which lack adequate pharmacy regulations.
Google Took Steps to Block Ads for Pharmacies in Countries Other than Canada
According to DOJ, Google was aware as early as 2003, that it was generally illegal for pharmacies to ship controlled and non-controlled prescription drugs into the U.S. from Canada. Google was also on notice that online Canadian pharmacies were advertising prescription drugs to Google users in the U.S. through its AdWords advertising program. Although Google took steps to block pharmacies in countries other than Canada from advertising in the U.S. through AdWords, it allowed Canadian pharmacies to do so.
Further, from 2003 through 2009, Google provided customer support to some of these Canadian online pharmacy advertisers to assist them in placing and optimizing their AdWords advertisements, and in improving the effectiveness of their websites.
Was Aware U.S. Consumers Were Buying from the Online Canadian Pharmacies
Google was aware that U.S. consumers were making online purchases of prescription drugs from these Canadian online pharmacies, and that many of the pharmacies distributed prescription drugs, including controlled prescription drugs, based on an online consultation rather than a valid prescription from a treating medical practitioner.
Google was also on notice that many pharmacies accepting an online consultation rather than a prescription charged a premium for doing so because individuals seeking to obtain prescription drugs without a valid prescription were willing to pay higher prices for the drugs.
Took Steps to Prevent Unlawful Drug Sales After Learning of Investigation
In 2009, Google became aware of the investigation into its advertising practices in the online pharmacy area and took a number of steps to prevent the unlawful sale of prescription drugs by online pharmacies to U.S. consumers. Among other things, Google began requiring online pharmacy advertisers to be certified by the National Association of Boards of Pharmacy’s Verified Internet Pharmacy Practices Sites program, which conducts site visits; has a stringent standard against the issuance of prescriptions based on online consultations; and, most significantly, does not certify Canadian online pharmacies. In addition, Google retained an independent company to enhance detection of pharmacy advertisers exploiting flaws in the Google’s screening systems.
Investigation Stems from Separate Case of Illegal Drug Sales Thru AdWords
This investigation of Google had its origins in a separate, multimillion dollar financial fraud investigation unrelated to Google, the main target of which fled to Mexico. While a fugitive, he began to advertise the unlawful sale of drugs through Google’s AdWords program. After being apprehended in Mexico and returned to the U.S., he began cooperating with law enforcement and provided information about his use of the AdWords program. During the ensuing investigation of Google, the government established a number of undercover websites for the purpose of advertising the unlawful sale of controlled and non-controlled substances through Google’s AdWords program.
Google Agreed to Pay $500M Forfeiture Penalty, One of Largest in U.S. History
Under the terms of an agreement signed by Google and the government, Google acknowledges that it improperly assisted Canadian online pharmacy advertisers to run advertisements that targeted the U.S. through AdWords, and the company accepts responsibility for this conduct. In addition to requiring Google to forfeit $500 million, the agreement also sets forth a number of compliance and reporting measures which must be taken by Google in order to ensure that the conduct described in the agreement does not occur in the future.
This financial forfeiture penalty is one of the largest in U.S. history and represents the gross revenue received by Google as a result of Canadian pharmacies advertising through Google’s AdWords program, plus gross revenue made by Canadian pharmacies from their sales to U.S. consumers.