Justice Department: To Protect Pharma Profits, We'll Just Take Money From Google

from the it's-enough-to-drive-someone-to-drugs... dept

Wed, Aug 24th 2011 4:01pm — Mike Masnick

So the big story of the day seems to be about the Justice Department getting Google to "forfeit" $500 million for having ads in the US for Canadian pharmacies. This isn't a huge surprise. News broke of the investigation a few months ago, when Google mentioned in an SEC filing that it had set aside $500 million to settle this particular matter. The Justice Department, in typical fashion, play up how they're protecting Americans from harm blah, blah, blah.

Here's the thing: I can't figure out how this makes any sense at all. First off, why is Google to blame? As we've discussed repeatedly, the US is pretty clear on its liability laws that liability should be applied to the party actually responsible, not third party platforms. Google accepted ads. That should not make it responsible for the content in those ads, let alone transactions that may occur because of those ads. Even worse, Google clearly made quite an effort to make sure such ads only involved legit drugs:

Google changed its policy on pharmacy ads in February 2010, so that it would only take ads from U.S. pharmacies accredited by the National Association of Boards of Pharmacy, and from online pharmacies in Canada that are accredited by the Canadian International Pharmacy Association.

So, now, as a media property that has advertising, do I need to fear that the Justice Department can force me to forfeit money because one of you clicks on an ad and makes a transaction that the government thinks is illegal? That's insane!

On top of this, it's even more ridiculous, because the US government has almost always turned a blind eye to grey market imports of drugs from Canadian pharmacies, because they know that without such affordable drugs, people will die. Here we have the Justice Department not helping to save lives, but helping to kill people off by making it that much more difficult to get approved drugs from Canada at more reasonable prices. In fact, amusingly, Senator Patrick Leahy is pushing legislation that will expand the ability of Americans to import such drugs (at the same time he's sponsoring the PROTECT IP Act, which wold force such sites off the internet -- he's not particularly consistent, that Senator Leahy).

Let's face facts here. This has absolutely nothing to do with public safety. This is a cynical move by the Obama administration to ensure support from the pharma industry. Early on in his administration, President Obama specifically supported allowing re-importation from Canadian pharmacies. In fact, the White House has repeatedly said that it's completely in favor of allowing such reimportation.

And yet now it takes $500 million from Google not for actually doing that, but for allowing ads to appear that promote a program the administration has officially endorsed? It's hard not to take the cynical view and simply see this as the US government taking from Google in an effort to make the US pharma industry (who hate, hate, hate Canadian imports) happy.

In the meantime, as Ryan Singel points out, Google is getting dinged $500 million here, while Goldman Sachs got dinged $550 million for "melting the economy." I guess Wall Street and pharma have much better lobbyists than Google.

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Filed Under: canadian pharmacies, drugs, forfeiture, grey imports, justice department, pharmaceuticals, reimportation
Companies: google

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another mike (profile), 24 Aug 2011 @ 4:14pm

liability
This is like making you responsible for the spam when I "joe job" your email address for my ad campaign.

By the way, any guys out there want to add two inches?
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Prashanth (profile), 24 Aug 2011 @ 4:16pm

Punish success, reward failure
I don't want to particularly turn this into a political flamewar, but taxation isn't punishing success and rewarding failure. This is punishing success (Google) and rewarding failure (of big pharmaceutical companies to provide affordable necessary drugs to American people).
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blaktron (profile), 24 Aug 2011 @ 4:23pm

Re: Punish success, reward failure
I hate to tell you, but thats exactly whats happening in the US, in every sector. Your people are in the process of being looted by your elite, since they see the internet as the writing on the wall for the old guard, and they know within a few generations the People will be uncontrollable.
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Mike42 (profile), 24 Aug 2011 @ 4:29pm

Re: Re: Punish success, reward failure
You are exactly right. I have revised my stance on net neutrality laws for this very reason. The only way Congress will make a law is if it can be perverted to give big business and industry over everyone else. (Thanks for opening my eyes, Mike!) Trickle-down policies would have worked if those in power weren't so corrupt. But, of course, power itself corrupts.
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aldestrawk (profile), 24 Aug 2011 @ 4:30pm

"Google clearly made quite an effort to make sure such ads only involved legit drugs:"

This is not my understanding from reading the NYT article.

http://bits.blogs.nytimes.com/2011/08/24/google-reaches-500-million-settlement-with-gove rnment/

"Since 2010, after Google became aware of the investigation, it has required that all Canadian online pharmacy advertisers be certified by the Canadian International Pharmacy Association and has specified that they can advertise only to Canadian customers."

and from an earlier NYT article:
http://www.nytimes.com/2011/05/14/technology/14google.html

"Until early 2010, Google required that all online pharmacies be verified by PharmacyChecker.com, which says it checks the credentials of online pharmacies. But many of the rogue pharmacies that advertised on Google during that period never applied to PharmacyChecker.com, according to Gabriel Levitt, vice president of the verification site."

My impression from this is that Google is being penalized for allowing such ads before February 2010 and that they were rather lax about checking. What surprises me the most is that Google doesn't appear to be fighting this judgement, in particular the high amount, very hard. $500 million is not chump change even for them. Instead, they seem to be trying to minimize publicity about it

Please don't read into my comment any support for the administration's pursuit of this case. I am just pointing out that Google was not exercising due diligence in accepting ads before February 2010.
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Anonymous Coward, 24 Aug 2011 @ 4:49pm

Re:
You hit it. Actually, Google made quite an effort to limit the market specifically to US and Canadian companies, even though the Canadian companies were often just illegitimate fronts for illegal or crap medicines. Most of those "Canadian" companies never sold squat to anyone in Canada.

Google made the mistake of creating a limitation, but allow Canadian companies to still market to the US in pharma.
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out_of_the_blue, 24 Aug 2011 @ 4:51pm

Now if only they'd prosecute Google for anti-trust.
My title is something of a duck -- I mean a canard -- as I don't expect that to EVER happpen. My bet is this is more in the nature of blackmail / political payoff for Google being able to operate pretty much without interference elsewhere. Or, it's possibly a transfer from the money-collecting arm of the NSA to Justice Dept for some reason we don't know.

The one thing that's highly likely is has little to do with stated reason... if Google thought itself innocent, then should have fought, so they caved in for some reason other than the cost of fighting, which would be minor; could have stretched it out for years before having to cough up.

But, even if my notions are wrong: Google is now convicted, so don't tell me they're aboveboard and pure of motive. (I can guess you can object to "convicted", probably one of those mere fines not admitting guilt deals, which should be illegal in themselves.)
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SpacePirate, 24 Aug 2011 @ 5:22pm

Collateral Damage
Besides it being ridiculous to punish the service provider instead of the law breaker there has been commercial collateral damage to other US businesses from the fine. As stated, Google uses of the non-governmental lobby group (NABA) to 'certify' pharmacies. The NABA does not believe there is any such thing as a legal online pharmacy, which is no surprise because they are funded and staffed by the 'old guard' brick and mortar pharmacies. The result is that the few legitimate players in the space are unable to advertise despite operating legal domestic businesses.

The state of Utah has actually created an online pharmacy board within their Department of Professional Licensing to regulate the practice of medicine online, though the NABA does not acknowledge this licensure or certify those licensed by the state of Utah. The result is a new, efficient and innovative industry is being trampled by a group of competitors that are masquerading as a regulatory agency to protect their vested interests.
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Josh in CharlotteNC (profile), 24 Aug 2011 @ 5:22pm

Re:
Google was not exercising due diligence in accepting ads before February 2010.

I think the point is, why should they have to exercise any due diligence?

Can I sue NewsChannel4 because I get scammed by a car dealer advertising there - or is the fault with the car dealer? Did hundreds of magazines and newspapers get sued because they ran ads from the tobacco companies before all those warnings had to be placed - or was the fault with the tobacco companies who knew their product was killing people?

Apply proper liability to the truly guilty parties, not the company that provides tools.
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Dave, 24 Aug 2011 @ 5:29pm

Wow
I didn't know I could buy drugs from Canadian online pharmacies! Thanks for the heads up!
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Rol Pks (profile), 24 Aug 2011 @ 5:59pm

Fight fire with fire.
I get the feeling Google should've turned around and used those 500M (which they'd already "put aside") and use them for pure lobbying.

Heck, we read story after story about all sorts of "taxes on innovation" levied against Google and other companies by all sorts of members of the old guard. Well, some of these tech companies happen to have a bunch of cash at hand, and they don't seem to be spending nearly as much of it lobbying as, say, the recording industry, which wouldn't be able to match them dollar for dollar.

Is it the "Do no evil" thing? Is it an inherent disgust for having to pay politicians to be able to make money as opposed to having the best product out there? I can certainly understand that disgust, since the mere idea would seem appalling to me (why should I have to do that? And how is it even moral?). But, hey, 500M is not chump change. And it accumulates.

I'd see it as the least of all evils. They could easily convince themselves that they'd be fighting a crusade that'll make everybody better off.

Pharma pressing on you? Spend 500M on politicians instead of just giving it away, see how that works. Recording industry wants to break the internet? 200M should fix that. Patent system is broken? Pay 12.5B for some patents with some production on the side? Hell no! A tenth of that will probably buy you either of the 2 political parties. Just take your pick.

Of course, we'll have to start worrying about what to do when Google and co. start getting too comfy owning the government, but they did promise to not be evil! :)
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John Doe, 24 Aug 2011 @ 6:01pm

I wish I could commit crimes, just give money back when caught and have idiots defend me
Google made hundreds of millions advertising illegal products. Google is a bit fuzzy on the number.

It sounds like a great deal to Google just to have to give the money back when caught. A criminal case would have cost them triple damages and criminal penalties.

Who know how much fake drugs were advertised on Google.

I, Google, and Mike may not agree with the current medical system, but if you don't want to obey the rule of law, feel free to move to a lawless country.
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Rekrul, 24 Aug 2011 @ 6:17pm

Re: liability
By the way, any guys out there want to add two inches?

No thanks, I'm tall enough. ;)
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Frank, 24 Aug 2011 @ 6:23pm

Re: Re:
OK so do people die when scammed by a car dealer, or what have you ? On the other hand, one could ask what is in that drug I bought from someone supposedly in Canada, and what are the potential consequences ? Sorry these are two different worlds.
Jesus was a socialist !
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Anonymous Coward, 24 Aug 2011 @ 6:50pm

Re: Collateral Damage
Well, let me ask you the obvious question:

If Google ran ads for crack cocaine, with links to dealers sites and cell phone numbers, would they be somewhat liable?

Think before you answer!
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aldestrawk (profile), 24 Aug 2011 @ 7:08pm

Re: Re:
A difference from your analogy is that Google was not just getting paid for ads by on-line pharmacies that may have been doing illegal things but that any and all Canadian, or foreign, on-line pharmacy could not legally do business in the U.S.. Google was warned about this as early as 2003 and kept doing it.
http://www.theregister.co.uk/2011/05/21/google_was_repeatedly_warned_over_illegal_drug_ads/

I am not saying I agree with U.S. law which bans ordering legitimate drugs from Canada, even with a prescription. I don't! Google was clearly aware and taking a risk in continuing to accept ads. Were they being altruistic in enabling U.S. citizens to easily find cheaper alternatives to buying expensive prescription drugs in the U.S. or were they being greedy, gambling that the U.S. would not initiate a case while they were making lots of money from Adwords from Canadian pharmacies?
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Anonymous Coward, 24 Aug 2011 @ 7:12pm

Some information reported by the WSJ that provides a bit more perspective into what was going on and Google's role:

http://online.wsj.com/article/SB10001424052748704083904576335483063623402.html
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aldestrawk (profile), 24 Aug 2011 @ 7:25pm

Re: I wish I could commit crimes, just give money back when caught and have idiots defend me
Google not only had to pay back the money they received from the ads they had to pay the estimated gross revenue made by the Canadian pharmacies from sales to customers in the US. I don't know how those two numbers compare but it is certainly a penalty.

The solution for fake drugs and pharmacies that hide their illegal activity should not be on Google as their is a simple solution already in place. You can call a number to confirm the legitimacy of a pharmacy either in Canada or the U.S.. That should be a required step for anyone to buy drugs on-line. Even if you don't have a prescription you would be crazy not to make sure your source was reliable.
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Anonymous Coward, 24 Aug 2011 @ 7:26pm

Re: Re: Collateral Damage
I thought the supremes had dealt with that issue already in a tonne of judgements against religious political laws already.

Is not in the records supreme court judges stating that "it would be dangerous for the government to suppress any form of speech based on no actual harm besides the mere fact that people don't like what others have said"?

People don't need to like it, but others can put up ads about drugs defending those things if they want too and even tell others where they can buy it legally and that includes cocaine, crack, meta-amphetamines and so forth.
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Anonymous Coward, 24 Aug 2011 @ 7:39pm

Re: Re: Collateral Damage
Now let me ask you this, does it make sense to criminalize something we don't like that will create a huge black market that can and probably will increase criminality because we don't like it or to protect some industry that don't really need protections?

Are politicians willing to cause irreparable harm to society just because they can?

I find the idea abhorrent to say the least.

In Virginia State Pharmacy Board v. Virginia Citizens Consumer Council, 425 U.S. 748 (1976), the Court overruled Valentine and ruled that commercial speech was entitled to First Amendment protection:

What is at issue is whether a State may completely suppress the dissemination of concededly truthful information about entirely lawful activity, fearful of that information's effect upon its disseminators and its recipients... [W]e conclude that the answer to this one is in the negative.
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Anonymous Coward, 24 Aug 2011 @ 7:44pm

Re: Re: Collateral Damage
44 Liquormart, Inc. v. Rhode Island, 517 U.S. 484 (1996)[1], was a United States Supreme Court case, which declared that a law banning the advertisement of alcohol except at the place of sale as unconstitutional and a violation of the First Amendment.

http://en.wikipedia.org/wiki/List_of_United_States_Supreme_Court_cases_involving_the_F irst_Amendment#Commercial_speech
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Anonymous Coward, 24 Aug 2011 @ 7:46pm

Re:
Google at heart is French they just run they never stand their ground.

That may change in the future but Google is not known for its appetite for litigation.
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RcCypher (profile), 24 Aug 2011 @ 7:48pm

Dying people are good for the economy
"Here we have the Justice Department not helping to save lives, but helping to kill people off by making it that much more difficult to get approved drugs from Canada at more reasonable prices."

I was listening to NPR as I am prone to do while I drive around for work. One day they were discussing how the tobacco companies were being forced to couch their arguments to the public. At one point the primary argument being used to sooth ruffled feathers was that while smoking causes no end of harmful effects to the smokers. The resultant health problems and the eventual death of the individual from smoking was....frankly....good for the economy. So here I saw the sentence I quoted above and noticed the gov't is doing the same thing with proscription drugs.

ITS A CONSPIRACY, meh...
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John Doe, 24 Aug 2011 @ 8:23pm

Re: Re: Re: Collateral Damage
One can advertise a LEGAL product like alcohol, but not an illegal product.

You can say you love illegal drugs all you want, you just can't sell it or earn money from people who sell it.

Disclaimer: I am not a lawyer

and Google already admitted that with hindsight they should not have done it, so I can't see what people like Mike are bitching about
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Anonymous Coward, 24 Aug 2011 @ 8:44pm

Re: Re: Re: Re: Collateral Damage
You got it! Here's the rub: Selling the drugs into the US was apparently illegal, which is the real issue.

It doesn't matter if it's pharma or crack, Google's "crack" team of lawyers should have caught onto it. Considering they took the time to block out every other country, you would think that maybe they just made a mistake and failed to do due diligence, which is likely why Google is paying up without a blink here.
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Jay (profile), 24 Aug 2011 @ 9:11pm

Re: Re:
"Actually, Google made quite an effort to limit the market specifically to US and Canadian companies, even though the Canadian companies were often just illegitimate fronts for illegal or crap medicines"

That part I bolded? How the hell do you know that?
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Anonymous Coward, 24 Aug 2011 @ 10:04pm

This is the definition of theft. Big Pharma stole from Google.
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Anonymous Coward, 24 Aug 2011 @ 10:11pm

Re: Re: Re:
"OK so do people die when scammed by a car dealer"

Yeah, if the car dealer said the car had breaks and it didn't or something like that. Or if he claimed it had airbags and it didn't. Cars can be very dangerous devices. and if it's some used, beat up car, who knows. There are all sorts of scam artists out there eager to make a buck, even if they have to lie about the safety of the car.
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Mike Masnick (profile), 24 Aug 2011 @ 10:28pm

Re: I wish I could commit crimes, just give money back when caught and have idiots defend me
Google made hundreds of millions advertising illegal products.

False. The pharmacies did the advertising. Google did not. That's the whole problem with people assigning blame to a service provider. Google is not the one who did the advertising, it just provided the platform. That's why this creates such a massive chilling effect for service providers.
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Mike Masnick (profile), 24 Aug 2011 @ 10:31pm

Re:
Some information reported by the WSJ that provides a bit more perspective into what was going on and Google's role:

Yikes. That makes this even worse. It shows how much Google did (above and beyond what the law requires) to filter out such ads. Some still got through and now they have to pay? Crazy. This is a ridiculous attack by the DOJ.
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Anonymous Coward, 24 Aug 2011 @ 10:59pm

This could also be considered a freedom of speech issue, Google should be able to tell you what alleged Canadian companies offer. Though this could be considered for commercial gain, I still don't think that should make a huge difference.
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A Guy (profile), 24 Aug 2011 @ 11:13pm

Re: Re:
It may be because they did so much to filter it out sadly. I could be mistaken, but aren't the safe harbors dependent on being content neutral?
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A Guy (profile), 24 Aug 2011 @ 11:18pm

Re: Re: Re:
I need to read before I comment. disregard
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NotMyRealName (profile), 25 Aug 2011 @ 4:21am

wasn't craigslist determined to be not guilty for their prostitution ads?
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BearGriz72 (profile), 25 Aug 2011 @ 4:59am

Re: Now if only they'd prosecute Google for anti-trust.
"Or, it's possibly a transfer from the money-collecting arm of the NSA to Justice Dept for some reason we don't know."
from the I-wear-a-tinfoil-hat-and-live-in-a-Faraday-cage... dept
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John Doe, 25 Aug 2011 @ 6:15am

Re: Re: I wish I could commit crimes, just give money back when caught and have idiots defend me
"Google made hundreds of millions advertising illegal products.

False. The pharmacies did the advertising. Google did not. That's the whole problem with people assigning blame to a service provider. Google is not the one who did the advertising,...."

I don't think the Google Boys are as smart as they they think they are, but one would have to be even dumber than Mike to take HUNDREDS OF MILLIONS OF DOLLARS and not know the money is dirty.

And we still don't know if the money is $200, 300, 400, 500, 600 MILLION or more and if Google even paid a penalty.
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ComputerAddict (profile), 25 Aug 2011 @ 6:37am

Re: Re: Collateral Damage
If Google ran the Ad? yes. But google didn't run these ad's Pharma Sites did. They used Google's platform, but that's no different than a Crack dealer putting up a 8.5x11 sheet of paper on a convenience store bulletin board saying "want crack? take a tab". Should the store take the paper down? yea probably. But thats an ethics issue. Should the store be liable for anyone that bought crack from the guy? no.
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Smeds, 25 Aug 2011 @ 7:04am

Now if they only had a business model for POT
The blackmailers in the Pharma industry strike again. Who says train robbery is a thing of the past. The medical industry robs trains every day, as the passengers roll into the emergency room.

Anyway, all this means it Canadian pharmacies will move to SEO.

Google is an admirable company. Usually when someone challenges Google, I guess something is wrong --- like the status quo and the political lobby has been crossed.

The only reason Pot is illegal in the USA is because the pharma and medical industry vultures cannot figure out a business model where they make all the money. It's too hard to compete with a bunch of cheap hippies growing hearty weeds on federal parklands.
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Charlie (profile), 25 Aug 2011 @ 7:15am

Re: I wish I could commit crimes, just give money back when caught and have idiots defend me
Why is it that denunciations such as yours always end with an invitation to move to another country, instead of an invitation to work to change the mess we've allowed to be created around us? That is, to change things in a practical manner, and one that is legal.

Approaching my 73rd birthday, I note that the U.S. has plenty of problems, but until we get past stridency, there's not much that can be done to reduce the problems.
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Chris Rhodes (profile), 25 Aug 2011 @ 7:57am

Re: Re: Re: Punish success, reward failure
You are exactly right. I have revised my stance on net neutrality laws for this very reason. The only way Congress will make a law is if it can be perverted to give big business and industry over everyone else.

THANK YOU. I wish more people understood this.

Everyone is aware that our politicians are crooks that funnel our money to big business through regulatory capture schemes and corporate handouts, and yet they expect that given power over the internet for "net neutrality" purposes, the politicians will suddenly start working for the benefit of the people. It's like some form of mass delusion.

"But . . . but . . . it has the word neutrality in it! Next you'll tell me that the patriot act didn't secure our freedoms like they claimed!"
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Chris Rhodes (profile), 25 Aug 2011 @ 8:02am

Re: Re: Re:
OK so do people die when scammed by a car dealer

Absolutely, if the condition of the car was not as advertised. You also left out his other example, but I guess it's not hard to see why.

"OK so do people die when they smoke cigarettes, or . . . wait. Um, I guess I can just use the weaker car dealer example instead and ignore the one that obviously disproves my point because I'm an intellectually dishonest hack!"
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Chris Rhodes (profile), 25 Aug 2011 @ 8:04am

Re: Now if only they'd prosecute Google for anti-trust.
Google is now convicted, so don't tell me they're aboveboard and pure of motive.

Err, being convicted of a crime now means you're immoral? In what universe do you live?
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btrussell (profile), 25 Aug 2011 @ 8:28am

Re: Re: Re:
Because Canadians didn't buy it! :)
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John Doe, 25 Aug 2011 @ 9:20am

Re: Re: I wish I could commit crimes, just give money back when caught and have idiots defend me
"Why is it that denunciations such as yours always end with an invitation to move to another country, instead of an invitation to work to change the mess we've allowed to be created around us? That is, to change things in a practical manner, and one that is legal."

I don't think I ever asked anyone to love the USA or lave it, but I get your point.

The point I was making is that you you want to live in a place (hell-hole) without the rule of law, it's always an option, which only someone dumber than Mike would do.

But I think we agree, is that what you don't do is decide you just don't obey the laws you don't like, like pirates or
Google, who already admitted they were wrong.

If you want to argue, that it would be a chilling-effect on "service providers" to not sell guns to the insane, to not serve drinks to people already drunk, or not sell millions of dollars of ads to criminals, be my guest. Just don't break the law on your own.
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btrussell (profile), 25 Aug 2011 @ 1:42pm

Re: Re: Re: I wish I could commit crimes, just give money back when caught and have idiots defend me
"But I think we agree, is that what you don't do is decide you just don't obey the laws you don't like,..."

Most people do. Everyday.
Jaywalking, speeding, failure to signal, breaking contracts...looking at my screen right now, I see I have reproduced copyrighted work on it.
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Prashanth (profile), 25 Aug 2011 @ 7:25pm

Re: Re: Re: Re: Punish success, reward failure
The irony is that because Congress is so much in the pay of these big industries, supporting net neutrality will have essentially the same effect as opposing it.
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Anonymous Coward, 25 Aug 2011 @ 8:02pm

Re: Re: Re: Collateral Damage
Actually, it would make law enforcement's job a lot easier if crack dealers advertised like that, wouldn't it?
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Gabriel Levitt, 29 May 2013 @ 11:48am

Re: Re:
Dear Anonymous Coward -

The problem, as we see it, is that Google did not enforce its own standard very well, which was to limit ads to online pharmacies approved by PharmacyChecker.com, which included licensed pharmacies in Canada. As this article makes clear the pharmaceutical and U.S. pharmacy industries are trying to conflate rogue pharmacy sites with reputable Canadian-based online pharmacies that help Americans afford medication.

So, in 2010, not only did Google take far more extensive actions to actually block rogue online pharmacies but it adopted a U.S.-only standard with NABP/VIPPS, banning safe Canadian sites from advertising in the U.S., essentially throwing the baby out with the bathwater.

Gabriel Levitt
Vice President
PharmacyChecker.com
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