London-based pharmaceutical maker GlaxoSmithKline (GSK) has agreed to pay US$3 billion to settle a bevy of US federal investigations, all related to the development and marketing of some of its biggest selling drugs, including the controversial diabetes drug Avandia.

The settlement also covers charges that the company promoted the off-label use of Advair, an asthma drug, and Wellbutrin, a treatment for depression. In addition, GSK (among other pharmaceutical companies) was accused of manipulating drug costs reported to the federal health insurance program Medicaid, which provides insurance for those with low incomes.

As for Avandia, many questions have emerged about whether GSK knew but withheld information pertaining to the drug’s heart risks before it was marketed. In June 2010, the US Department of Justice subpoenaed GSK for more information about Avandia development and marketing.

The Wall Street Journal notes that other companies have recently paid large settlements to the government in recent years, including Pfizer ($2.3 billion in 2009) and Eli Lilly & Co ($1.4 billion in 2009), among others. The $3 billion settlement is roughly equal to the amount Avandia alone earned in 2006, the year before concerns about heart risks began to surge.

Investors may well have been relieved at the settlement amount, which falls comfortable within the £2.9 billion (over $4.5 billion) GSK had set aside for legal fees at the end of the third quarter. The company’s stock rose about 2.8% during the day today.