Google to pay feds $500M in settlement over online drug ads

Google has agreed to a $500 million settlement with the government for allowing online Canadian pharmacies to illegally place advertisements on its AdWords service, the Justice Department announced Wednesday.

It is one of the largest forfeitures ever and represents the revenue Google received from the pharmacy ads plus the revenue the pharmacies made from selling drugs in the United States. 

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The importation of prescription drugs is usually illegal because the government cannot ensure the drugs meet American safety and effectiveness standards, according to a Justice Department news release. 

"The Department of Justice will continue to hold accountable companies who in their bid for profits violate federal law and put at risk the health and safety of American consumers," said Deputy Attorney General James Cole. "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." 

Google said in a blog post last year that blocking illegal ads is a "cat-and-mouse game," as the pharmacies find new ways to appear in advertisements.

According to the Justice Department's investigation, Google took steps to block advertisements for pharmacies in countries other than Canada but only blocked the Canadian advertisements when they became aware of the government investigation in 2009.

From 2003 to 2009, Google provided customer support to some of the online Canadian pharmacies, according to investigators. 

As part of its investigation, the government established undercover websites to advertise drugs on Google.

“We banned the advertising of prescription drugs in the U.S. by Canadian pharmacies some time ago. However, it’s obvious with hindsight that we shouldn’t have allowed these ads on Google in the first place," a Google spokeswoman said. "Given the extensive coverage this settlement has already received, we won’t be commenting further."

The New York Times first reported the results of the investigation Wednesday morning.

--The post was updated at 12:08 p.m.

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