Google Inc is close to settling a U.S. criminal probe into allegations that it made hundreds of millions of dollars from online pharmacy ads that break U.S. laws, the Wall Street Journal reported, citing people familiar with the matter.

Earlier this week the Internet search giant said it had set aside $500 million to potentially settle a U.S. Department of Justice investigation into its online advertising practices.

The charge reduced the company's first-quarter net income to $1.8 billion, or $5.51 per share, Google said.

The investigation, conducted with the U.S. Food and Drug Administration, examined whether Google knowingly accepted ads from online pharmacies and turned a blind-eye to their alleged illicit activities, the Journal reported on Thursday.

It's unclear whether those online drugstores were alleged to have sold counterfeit or expired drugs, whether they didn't require a valid doctor's prescription, or both, the paper said.

Google made changes last year to its online pharmacy ad policies after the FDA began the investigation, the paper reported.

A Google representative declined to discuss the matter, and the Justice Department did not immediately respond to requests for comment.

the Justice Department has been active in the health care sphere in recent years. Pfizer Inc was slapped in 2009 with a $2.3 billion in fines for illegally marketing a discontinued pain killer and two epilepsy drugs for ailments that they are not approved to treat.

Also in 2009, Eli Lilly & Co agreed to pay $1.42 billion to settle a case over the off-label marketing of its antipsychotic drug Zyprexa, one of its top sellers.

(Reporting by Dan Levine and Diane Bartz; Editing by Ted Kerr)

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