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Google agrees to $500-million settlement over online drug ads

August 24, 2011 | 12:54 pm

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Online search giant Google Inc. has agreed to pay $500 million to settle federal claims that it sold ads to online Canadian pharmacies that targeted U.S. consumers, leading to illegal imports of prescription drugs.

Under the settlement, Google forfeited the revenue it received from the pharmacies plus the revenue those companies gained from their sales through Google’s AdWords program.

The Justice Department said the forfeiture was one of the largest ever in the United States.

Google said it first set the money aside for this settlement months ago and disclosed that it might settle with the Justice Department in a SEC filing in May.

"This settlement has already received extensive coverage as a result of our earlier filing back in May," the Mountain View, Calif., company said. "However, we'd like to make clear that while we banned the advertising of prescription drugs in the U.S. by Canadian pharmacies some time ago, it's obvious with hindsight that we shouldn't have allowed these ads on Google in the first place."

As a part of the settlement, the Justice Department said that Google has also agreed to "a number of compliance and reporting measures which must be taken by Google in order to insure that the conduct described in the agreement does not occur in the future," though the department didn't specify what those measures were.

Shipping prescription drugs from pharmacies outside the U.S. to stateside consumers "typically violates the Federal Food, Drug and Cosmetic Act and in the case of controlled prescription drugs, the Controlled Substances Act," the department said, adding that Google was aware of this as far back as 2003.

"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 Deputy Atty. Gen. James Cole in a statement.

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-- Nathan Olivarez-Giles

twitter.com/nateog

Photo: A Google logo at Google's headquarters in Mountain View. Credit: Kimihiro Hoshino/AFP/Getty Images

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