Google reaches $500m deal over drug ads

Google has reached a $500m settlement with US prosecutors to resolve a criminal investigation into its accepting advertisements from companies selling unlicensed pharmaceuticals.

The payment is one of the largest forfeitures imposed in the US, according to federal authorities, and is a severe dent to the reputation of a company that launched with a promise to “do good in the world”.

The internet search company was aware as long ago as 2003 that it was illegal in most cases for pharmacies based in Canada to ship prescription drugs into the US, according to an agreement between prosecutors and Google that was made public on Wednesday. Despite this, Google continued to accept the adverts on its AdWords search advertising system, and advised pharmacies on how to make messages more effective, until it learnt of the criminal inquiry in 2009, the agreement added.

In a statement, Google said: “We banned the advertising of prescription drugs in the US 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.”

The $500m payment represents the revenues Google made from selling the adverts and the estimated revenues generated by the pharmacies from their sales to US consumers.

The settlement allows the search engine to avoid criminal prosecution in a probe by the US attorney in Rhode Island, justice department officials in Washington and the Food and Drug Administration. A deal had been expected since May, after Google set aside $500m for an unspecified legal matter.

Like Microsoft and Yahoo, Google has already changed its ad policies following pressure from licensed pharmacies, major drugmakers and the FDA to do more to filter out ads for prescription medications that are counterfeit or unlicensed for sale in the US. Many are manufactured in China, India and other countries.

In 2008, US pharmacy regulators wrote to Google urging it to end its reliance on an outside company that it had used to screen out illicit pharmacies. The company had let through advertisers “that source their prescription drugs from various locations outside of the United States . . . which is contrary to US law,” according to the letter from the National Association of Boards of Pharmacy.

Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't cut articles from and redistribute by email or post to the web.