GlaxoSmithKline Plc's diabetes drug Avandia should be allowed to stay on the market but with additional warnings, U.S. health advisers recommended on Wednesday, easing a threat of further costly litigation that could have followed a ban.

A majority of the 33-member panel of outside experts found data raised concerns about heart attacks associated with the widely used pill, but not enough to warrant its withdrawal from the market.

The Food and Drug Administration will make the final decision in the coming months and the agency usually follows recommendations from its advisory committees.

But some opponents of the drug said the panel voiced enough concerns that the FDA could still seek Avandia's removal.

Even if the panel's recommendation lifts a legal cloud for Glaxo, analysts and doctors predicted further declines in sales of Avandia as patients defect to alternatives, including Takeda Pharmaceutical Co's Actos.

Avandia was once Glaxo's second-biggest drug at $3 billion a year until health concerns emerged. Its sales plunged to $1.18 billion in 2009, equivalent to 2.7 percent of Glaxo's group sales.

Patients aren't dummies; they'll read the papers and know there's another drug that's similar, called Actos, that does not have restrictions, said Dr. Jacob Warman, Chief of Endocrinology at The Brooklyn Hospital Center.

U.S.-listed shares of Britain-based Glaxo closed up 1.8 percent on the New York Stock Exchange after the vote and one analyst predicted further gains in London on Thursday.

Mike Ward of Ambrian Partners in London said the panel decision drew the teeth from litigants hoping for a nasty vote against Glaxo. I think Glaxo shares will get a nice bounce in London in the morning.

WARNINGS, RESTRICTIONS

The debate on Avandia's safety has raged since warnings were placed on the drug in 2007 saying some research linked the drug to a higher heart attack risk but the data was inconclusive.

The advisory panel heard two days of sharply conflicting opinions from inside and outside the FDA, and reviewed hundreds of pages of data, before coming to its decision.

Its members cast 20 votes for various options that would allow Avandia to stay on the market. Only 12 members voted to recommend that the FDA withdraw the pill, and there was one abstention.

A detailed breakdown of the voting showed 10 votes cast for continued marketing of Avandia with additional warnings and restrictions on use.

Seven panelists voted for placing additional warnings on the drug and three voted for marketing with the current label.

Zero votes were cast for Glaxo's request to remove the existing warning about possible risk of heart attack.

We need very tight control over the administration of this drug, said Dr. Clifford Rosen, a panel member and head of clinical and translational research at the Maine Medical Center Research Institute.

David Oakes, a statistician from the University of Rochester in New York, said he voted for continued marketing with new warnings but it's not a vote of confidence in Avandia.

Ira Loss, an analyst with Washington Analysis, said it would be difficult for FDA to disregard what a big majority of this panel suggested but the mixed vote gives FDA maximum flexibility.

The panel also voted to recommend continuation of a trial called Tide that compares Glaxo's Avandia with Takeda's Actos. Some critics of Avandia had argued there was enough evidence against Avandia that the trial should be abandoned.

Glaxo said it would continue to work with the FDA in the best interest of diabetes patients.

Patients taking Avandia should speak with their physician about their treatment and any questions they may have regarding the safety of the medicine, Dr. Ellen Strahlman, Glaxo's chief medical officer, said in a statement.

Avandia also faces scrutiny from the European Medicines Agency, which has launched a new review into the drug's risks and benefits and will discuss the matter July 19-22 in London.

CRITIC STILL HOPEFUL

Steve Nissen, a cardiologist at the Cleveland Clinic who presented data at the meeting that showed an increased heart risk with Avandia, said the panel gave the FDA enough cause to seek the drug's removal.

They gave the leadership of the FDA enough ammunition to withdraw if they want to withdraw, he said.

The Avandia case is being closely watched as a test of how the FDA under Democratic President Barack Obama will handle drug safety issues. Officials face heavy pressure from consumer groups and some lawmakers who say the agency failed to protect the public under past administrations.

Representative Rosa DeLauro, a sharp critic of the FDA's handling of drug risks, said the panel vote was gravely disappointing and raises serious questions as to whether the science was presented in an unbiased manner. She said Avandia should be removed from the market.

Concerns about the medicine's adverse impact on the heart have triggered a slew of lawsuits in the United States.

On Tuesday, Glaxo agreed to pay $460 million to settle thousands of lawsuits over Avandia, Bloomberg reported, citing people familiar with the settlements.

Glaxo will settle about 10,000 suits for an average of $46,000 each, Bloomberg said. A source familiar with the litigation told Reuters that at least 2,500 claims out of as many as 14,000 have been settled.

(Reporting by Lisa Richwine and Susan Heavey; Additional reporting by Lewis Krauskopf, Grant McCool and Ransdell Pierson in New York and Ben Hirschler in London; Editing by Tim Dobbyn)

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