10/18/2007- The U.S. Department of Veterans Affairs has decided to "severely limit" the use of GlaxoSmithKline Plc's diabetes drug Avandia over safety concerns, the New York Times reported on Wednesday.

The agency, which treated more than 5 million military veterans last year, removed the drug from its "formulary," or list of approved drugs, on Oct. 5 the paper said. It will allow patients currently taking the drug to continue although it is urging doctors to inform patients about the risks.

VA sales make up about 8 percent of Avandia's sales, the paper said.

Once a $2.2 billion franchise for the British drugmaker, U.S. Avandia sales have fallen an estimated 60 percent since May since the New England Journal of Medicine published an analysis questioning the drug's safety, the Times said.

The article suggested that using the drug increased the risk of a heart attack by more than 40 percent. The Food and Drug Administration is reviewing the drug, it said.

A Glaxo spokeswoman said it was too early to say what the impact of the VA decision will have on the drug and said it did not believe the decision was in the best interest of patients, according to the paper.

The VA issued more than 161,000 Avandia prescriptions from Sept. 2006 to Aug. 2007, the paper said.