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Has Google Cut a Backroom Deal With Big Pharma?

Has Google Cut a Backroom Deal With Big Pharma?

Is Google squeezing out ads for small, legitimate online pharmacies? The founder of ProgressiveRx.com says it is, and he thinks Google's been pressured by big pharmaceuticals to do it. Google recently changed the certification it requires online pharmacies to earn in order to participate in Adwords. The new benchmarks, Hayden Hamilton said, are virtually impossible for all but the largest pharmacies to meet.

By Renay San Miguel
02/19/10 5:00 AM PT

I had planned on using Hayden Hamilton, founder of the Portland, Oregon-based ProgressiveRx.com, as my source for updates on how things were going in Washington with healthcare reform -- especially regarding any technology-driven solutions to spiraling healthcare costs. After all, Progressive is an online pharmacy resource that helps consumers buy discounted drugs from overseas outlets, one of many that have sprouted on the Internet and seen their traffic soar along with the cost of buying medications. Hamilton was keeping close watch on the goings-on in D.C., since he has a business stake in the outcome.

However, last week Hamilton received a very troubling diagnosis from Google AdWords, and now his company's financial health is in jeopardy. And he thinks the big pharmaceutical companies -- and their lobbying clout -- are behind it all.

"I guarantee you, none of [Google's] users are writing them and saying, 'Stop making it easy to find inexpensive drugs online,'" Hamilton told me.

Yet there's something else weighing down on ProgressiveRx -- the differences in how online pharmacies are ranked based on who's doing the ranking. Hamilton wants you to know he's a legitimate, legal business simply trying to provide cash-strapped or insurance-poor consumers with cheaper medications, even if they come from outside the U.S. He makes overseas trips to check on his suppliers. His drugs are safe, he said, because they're the same drugs being bought by the brand-name pharma companies.

Yet one third-party watchdog says ProgressiveRx is OK; another has the company on its "not recommended" list.

Stuck in between is Hamilton, who could probably use an extra-strength pain reliever right now.

Moving the Goalposts

Hamilton relies on placement in Google AdWords for about 70 percent of his traffic. So the following note from Google AdWords focused his attention like an particularly-expensive bill from a health insurance provider:

"We've decided to change our policy regarding online pharmacy sites in the U.S. and Canada. Starting at the end of this month, Google AdWords will only accept ads from online pharmacies in the U.S. that are accredited by the National Association Boards of Pharmacy VIPPs program, and from online pharmacies in Canada that are accredited by the Canadian International Pharmacy Association. These pharmacies may only target ads to users in the country in which they are accredited. Additionally, we will no longer accept advertisements from affiliates of online pharmacies."

Hamilton knows the score regarding online pharmacy validation, the concerns over counterfeit drugs, fraudulent drug sellers and possible health risks. He also knows how important it was for ProgressiveRx to get the high marks it's received from PharmacyChecker.com, which has evaluated online pharmacies for safety, customer service and price comparisons since 2003. It's been used by Google to validate online pharmacies since 2006.

Hence the effect on Hamilton's blood pressure with the next paragraph of the AdWords note:

"Accordingly, we will no longer be using PharmacyChecker as our 3rd party verifier of online pharmacies since we will be referencing the VIPPs verification process instead. AdWords advertisers who have a valid PharmacyChecker ID but which are not accredited by VIPPs or CIPA will no longer see their online pharmacy ads displayed once this policy change comes into effect," the note continued.

"What boggles my mind is that Google has every incentive from a revenue and user perspective to stick with its PharmacyChecker policy," Hamilton said. "I have no doubt they're making a fortune off of their ads in this area. The amount we're paying them is phenomenal. They were kind of the leaders in this, and then out of the blue they change. I would love to know what prompted this."

Hamilton has his suspicions -- the same pharmaceutical lobby that he says torpedoed efforts to make buying drugs from overseas easier in the Senate's healthcare bill. "It's pressure from big pharma, it really is."

Survival of the Biggest

That theory was shared by Gabriel Levitt, vice president for PharmacyChecker. "There is a common-sense perspective," Levitt told me. "If you look at all the media reports, if you look at all the activities of the NABP, of groups obviously funded by the pharmaceutical industry, you see they're been putting pressure on the search engines in ways that would benefit the big companies' interests, which is prices."

Jennifer Wall, a spokesperson for the Pharmaceutical Research and Manufacturers of America, told me that her group had no contact with Google prior to the AdWords change, and she's not aware of any member companies doing so either. She referred me to a statement from PhRMA Vice President Ken Johnson, who highlighted the continuing problem of criminal outfits using the Internet to advertise and sell counterfeit pharmaceuticals. "The National Association of Board of Pharmacy recently reported than more than 5,000 Web sites selling prescription drugs are not in compliance with pharmacy laws and standards that are in place to protect patient health. The growing worldwide counterfeit threat -- that is being fed, in part, by rogue online pharmacies -- is clearly endangering the lives of patients worldwide, so we applaud Google for playing a positive role in helping protect patient health and safety," Johnson said.

I asked Google if the major pharmaceutical companies had pressured the company into changing the policy, and whether or not it had any problems with the job PharmacyChecker had done in validating online pharmacies for Google for the past three years. Company spokesperson Deanna Ying sent me a Google Blog post that basically repeats the information in the memo that Hamilton received. "We're unable to share anything more beyond that," Ying said.

Google also hasn't shared why it changed its policy with PharmacyChecker, Levitt said. "Google has not disclosed its reasons for further restricting online pharmacy advertisers, but they did make it clear that it was not a problem with our service."

Can't ProgressiveRx.com and other online pharmacies just apply for accreditation with the NABP's VIPPS program? Here are the VIPPS standards, as described on the NABP Web site:

"To be VIPPS accredited, a pharmacy must comply with the licensing and inspection requirements of their state and each state to which they dispense pharmaceuticals. In addition, pharmacies displaying the VIPPS seal have demonstrated to NABP compliance with VIPPS criteria including patient rights to privacy, authentication and security of prescription orders, adherence to a recognized quality assurance policy, and provision of meaningful consultation between patients and pharmacists."

"That means we would have to have a pharmacy in every state in the U.S., which is why there are only 19 companies that qualify -- CVS, Walgreens, etc.," Hamilton said. " It's impossible to get VIPPS certification. The pharmaceutical industry set it up that way. It was just set up so [big pharma] could say, 'make sure your internet pharmacy is VIPPS certified,' and since none of them are, they can raise doubts about all of them."

Most of the sites with the VIPPS seal of approval are indeed associated with large, deep-pocketed companies: Aetna, Caremark, CVS, Savon, Walgreen, Teldrug, Medco, etc. The granddaddy of all online pharmacies, Drugstore.com, is VIPPS-approved.

You look up ProgressiveRx on the NABP "Not Recommended" list, and sure enough, there's Hamilton's company.

There are three main reasons why a company would end up on that list, according to Carmen Catizone, executive director of the NABP: out of compliance with federal/state laws, importing products from outside the U.S., and/or not requiring a valid prescription.

Hamilton says it's that second reason -- importing drugs from Canada and India -- that has his company on the "Not Recommended" list, and it points to what he says is the problem with Google's policy shift. "When Big Pharma comes out and says, 'there is no possible way that any drugs other than ours purchased in the U.S. are legit, and if you buy anything other than that category, there's a risk of death,' that's just fearmongering. It's perfectly safe to buy drugs from Australia, New Zealand, Canada, India. People aren't dropping dead on the streets in those countries.

"Not all Internet pharmacies are legitimate, a lot of them are pushing counterfeit drugs or drugs from disreputable manufacturers. So let's try to do a substantive appraisal of what's legitimate and what's not," he said. "PharmacyChecker does actual inspections regardless of the country. They make sure everything meets all health and safety standards and there's a licensed pharmacist on staff in all locations. They've just taken a very common-sense, practical but very safe approach that allows people to buy safe drugs from abroad. That, in my mind, is the most reasonable way to approach the issue."

'No Legal Options'

Hamilton's company isn't strictly an online pharmacy. As it says on its Web site, it's a portal to leading drug manufacturers around the world. It buys medications directly from the source, most of those in Canada and India, and has no overhead like a regular pharmacy, so it can offer much lower prices. The plants in Bangalore, India, that are his suppliers for drugs, Hamilton said, are the same FDA-approved ones providing the generic versions of medications made by the big U.S. firms. So if anybody raises doubts about counterfeit drugs in his supply chain, "You could ask them (the big pharma companies) the same question. They're coming from India. How can you make sure they're not counterfeit?"

Not being able to use Google AdWords "is a massive hit in terms of the number of people who are becoming aware of our service," Hamilton said. "We're just going to have to look for other ways to get the message out." There are no legal options, and all he can hope for "is a backlash, like there was for [Google's] decision around China, and that people start paying attention. I think once all those ads come down, potentially people will pay attention, and there will be a backlash."

In six years of doing business, filling some 90,000 orders, Hamilton says he hasn't receive one complaint of counterfeit drugs or anybody getting sick from using a medication via ProgressiveRx.com. PharmacyChecker's Levitt also said he's not aware of any consumer complaints regarding Hamilton's company.

However, if Hamilton is feeling a little queasy over the past week, it may be because his company is getting squeezed between the need to ensure safety in the online pharmacy world, and the legendary clout wielded by the pharmaceutical lobby. Google may be the biggest, loudest thing going in cyberspace, but it appears that Big Pharma has concocted just the right remedy to sedate the search giant.


TechNewsWorld columnist Renay San Miguel started his journalism career with his hometown newspaper in Texas in 1979. He moved to television in 1985, anchoring, producing and reporting in Austin, Dallas and San Francisco before joining CNBC as a technology correspondent from 1997 to 2000. Following a stint with CBS MarketWatch, which included filing tech stories for the CBS Early Show, San Miguel joined CNN Headline News in 2001 as an anchor/tech reporter. He also contributed digital content for CNN.com. After his 2007 departure from CNN, San Miguel founded Primo Media and now freelances in television/online reporting and media consultation.


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