Bitter Pill: Google Forfeits $500M Generated by Online Canadian Pharmacies

Ads on the search engine resulted in illegal shipments of prescription drugs into the U.S.

Google has swallowed a bitter pill, agreeing on Wednesday to surrender $500 million for allowing online Canadian pharmacies to place advertisements through its AdWords program targeting U.S. consumers.

The ads resulted in illegal shipments of prescription drugs into the U.S.

The forfeiture, the result of an investigation by the U.S. Attorney’s Office in Rhode Island and the FDA/OCI Rhode Island Task Force, will be paid as a fine to the U.S. Department of Justice. It represents revenue received by Google for the ad placements, plus revenue earned by Canadian pharmacies.

According to the Justice Department, Google knew as early as 2003 that it was generally illegal for pharmacies to ship controlled and non-controlled prescription drugs from Canada, according to the Department of Justice. The company already had set aside $500 million back in May with the expectation they'd have to pay.

The practices are illegal because the Food and Drug Administration cannot ensure the safety of the foreign prescription drugs.

“This investigation is about the patently unsafe, unlawful, importation of prescription drugs by Canadian online pharmacies, with Google’s knowledge and assistance, into the United States, directly to U.S. consumers,” Peter F. Neronha, U.S. Attorney for the District of Rhode Island, said in a statement. “It is about holding Google responsible for its conduct by imposing a $500 million forfeiture, the kind of forfeiture that will not only get Google’s attention, but the attention of all those who contribute to America’s pill problem.”

Google learned of the investigation in 2009 and began efforts to prevent further illegal exchanges, including hiring an independent company to help detect pharmacy advertisers exploiting flaws in the Google’s screening systems.

The investigation came about via a separate, multimillion-dollar financial fraud investigation unrelated to Google. The primary suspect fled to Mexico and began advertising prescription drugs via AdWords. Once apprehended the suspect agreed to cooperate with law enforcement.