Google Settles AdWords Lawsuit Over Illegal Pharmaceutical Ads

Story first appeared in Vator News.

Google's Apparent Profit Off of Ads From Illegal Online Pharmacies Has Ruffled the DOJ

Google's legal woes are never-ending, but now it's apparently getting slapped with such deep-impacting allegations that it's willing to shell out a sizable chunk of its yearly revenues just to make them go away. Google has set aside $500 million to resolve a case with the Department of Justice over illegal ads from bogus online pharmacies that offer to sell drugs without a prescription, according to a report from the Wall Street Journal.

The Justice Department is investigating how much the company knew as it accepted ads for online pharmacies in Canada and abroad—ads that it subsequently made hundreds of millions of dollars in ad revenue from.

Much of the pressure comes not only from the Department of Justice, but from the Food and Drug Administration as well, according to people familiar with the matter. Back in 2003, Google began banning ads from U.S. pharmacies that offered to sell prescription drugs like Vicodin and Viagra without a prescription, as did Yahoo and Microsoft. The shift largely came from pressure from the FDA to crack down on such ads.

But a year later Google incensed the FDA and U.S. pharmacies once again when it announced that it would continue to serve ads from Canadian pharmacies. When the FDA began probing into Google pharmacy ads recently, the company changed its policy once again and promised to serve ads from licensed U.S. pharmacies only.

If Google does, indeed, end up paying $500 million to the Department of Justice, it would be the largest penalty ever paid by a company to settle a dispute with a government agency. In 2007, Yahoo, Microsoft, and Google together paid a combined fine of $31.5 million to settle a case with the DOJ over allegations that the companies had accepted ads from illegal gambling sites, in violation of the Federal Wire Wager Act.

And yet if Google were to pay the $500 million, it would still be little more than a drop in the proverbial bucket.  Of the $29.3 billion that Google made in revenues for the entire year of 2010, a whopping $28.2 billion came from ad revenue alone.

US FDA warns Pharma firm about Facebook Promotion

Bloomberg / Business Week

The U.S. Food and Drug Administration has warned a pharmaceutical company that its use of the Facebook Share button to promote a cancer-fighting medication violates FDA requirements for disclosing information about drugs.

The FDA, in a letter sent to drug-maker Novartis Pharmaceuticals July 29, tells the company that its use of Facebook Share to promote Tasigna is incomplete and misleading.

This is likely the first time the FDA has issued a warning to a pharmaceutical firm for using Facebook to promote its products, said Jeffrey Chester , a privacy advocate and executive director of the Center for Digital Democracy.

The FDA, which posted the warning letter on its website this week, asks Novartis to stop using Facebook Share to promote the leukemia drug.

"The shared content is misleading because it makes representations about the efficacy of Tasigna but fails to communicate any risk information associated with the use of this drug," said the FDA letter, signed by Karen Rulli, acting group letter of the agency's Division of Drug Marketing, Advertising, and Communications. "In addition, the shared content inadequately communicates Tasigna's FDA-approved indication and implies superiority over other products."

FDA rules require that most medication promotional pieces contain information about risks associated with taking the drug, the letter said. In addition, promotional materials are misleading if they suggest a "drug is safer or more effective than another drug when this superiority has not been demonstrated by substantial evidence or substantial clinical experience," the letter said.

Novartis also failed to notify the FDA of the Tasigna promotion, as required by the agency, the letter said.

Novartis, in a statement, said it takes the FDA letter "very seriously."

"We have addressed its concerns by taking the direct and immediate action of taking down the widget referenced by the FDA," the company said. "Novartis will continue to have active discussions with the FDA to understand fully all of the concerns. We also will assess all of our Web assets and materials based on these concerns."

The warning letter highlights a problem with Facebook and other websites targeting advertising dollars from pharmaceutical and companies, said Chester, who asked the FDA in March to investigate the online marketing of drugs. Facebook should be responsible for creating safeguards for the marketing of medications and other health products on its site, he said.

Websites "see digital dollars in their bottom lines and are ignoring the health risks confronting consumers who are targeted using social-media marketing," Chester said. "This letter is a wake-up call -- for the pharma industry, Facebook, and social media application companies."

The FDA's letter is appropriate, Chester added. "Risk warnings must be prominently disclosed -- and not purposefully ... hidden by making a consumer click for more information," he said.

A representative of Facebook didn't have an immediate comment on the letter or Chester's perspective.