By Erika Morphy
08/24/11 2:50 PM PT
The U.S. Department of Justice has settled its beef with Google over drug advertisements from Canadian pharmacies targeting U.S. buyers. The search giant will pay half a billion dollars in the settlement. The figure was based on revenues received by Google as well as the pharmacies involved. Google (Nasdaq: GOOG) has agreed to a US$500 million settlement with the U.S. Department of Justice for allowing online Canadian pharmacies to place ads through its AdWords program targeting consumers in the United States. The ads resulted in the illegal importation of controlled and non-controlled prescription drugs into the U.S., according to the Justice Department. Neither the DoJ nor Google responded to the E-Commerce Times' request for comment in time for publication. The $500 million fine was one of the largest ever in the U.S. It was based on the gross revenue received by Google from the Canadian pharmacies' ad campaigns, plus gross revenue generated by Canadian pharmacies from their sales to U.S. consumers.
The laws used to prosecute Google -- the Federal Food, Drug and Cosmetic Act and the Controlled Substances Act -- were not specifically aimed at the online channel. It just happened that is how the pharmaceutical drugs found their way from distributor to consumer. However, even legitimate pharmaceutical marketing by U.S. drug makers to U.S. consumers can be fraught with peril, especially when the marketing takes place online. The regulatory agencies have been slow to provide definitive guidelines regarding what is acceptable for online marketing in this space. The end result sometimes is that a drug maker will launch a campaign and then be informed it has violated a particular regulation. For example, last year there were media reports about a warning that the U.S. Food and Drug Administration...