Google to pay U.S. $500 mln over online drug ads

By Diane Bartz

WASHINGTON (Reuters) - Google has agreed to pay $500 million to settle a probe that it allowed online Canadian pharmacies to place ads to sell drugs in the United States, the U.S. Justice Department said on Wednesday.

The forfeiture is one of the largest ever in the United States, the Justice Department said. It represents Google's revenues from Canadian pharmacy advertisements and Canadian pharmacies revenues from U.S. sales.

Google had previously set aside that amount for a possible settlement over its advertising practices, according to a regulatory filing in May.

The advertisements led to illegal imports of controlled and noncontrolled prescription drugs into the country, the Justice Department said.

"While Canada has its own regulatory rules for prescription drugs, Canadian pharmacies that ship prescription drugs to U.S. residents are not subject to Canadian regulatory authority, and many sell drugs obtained from countries other than Canada which lack adequate pharmacy regulations," the department said.

Google at one time accepted advertising from overseas online pharmacies but later confined such ads to those from the United States and Canada.

Google announced in a February 2010 blog post that it was banning advertising by Canadian pharmacies selling prescription drugs in the United States.

"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," the company said in a brief statement.

(Reporting by Jeremy Pelofsky and Diane Bartz; Editing by Tim Dobbyn)