Eli Lilly agreed today to pay up to $500 million to settle 18,000 lawsuits frompeople who claimed they developed diabetes or other diseases aftertaking Zyprexa, Lilly’s drug for schizophrenia and bipolar disorder

Including earlier settlements over Zyprexa, Lilly has now agreed topay at least $1.2 billion to 28,500 people who claim they were injuredby the drug. At least 1,200 suits are still pending, the company said.About 20 million people worldwide have taken Zyprexa since itsintroduction in 1996.

The settlement covers cases filed in state and federal courts by 14plaintiffs’ law firms or groups of firms, Lilly said. The federal suitshave been overseen by a judge in Brooklyn, Jack B. Weinstein, of the Eastern District of New York.

The settlement will not affect civil or criminal investigationspending over Zyprexa from state attorneys general and federalprosecutors, which are continuing.

Both Lilly and lawyers for plaintiffs said they were pleased withthe agreement. With sales of $4.2 billion last year, Zyprexa is Lilly’slargest-selling drug and a major contributor to the company’s profits.Lilly shares were little changed after the settlement announcement.

Zyprexa is the brand name for olanzapine, a potent chemical thatbinds to receptors in the brain to reduce psychotic hallucinations anddelusions. Clinical trials show Zyprexa also causes severe weight gainand increases in cholesterol and blood sugar in many patients.

Documents provided to The New York Times last month by a lawyer whorepresents mentally ill patients show that Lilly played down the risksof Zyprexa to doctors as the drug’s sales soared after its introductionin 1996. The internal documents show that Lilly’s own clinical trialsfound that 16 percent of people taking Zyprexa gained more than 66pounds after a year on the drug, a far higher figure than the companydisclosed to doctors.

The documents also show that Lilly marketed the drug as appropriatefor patients who do not meet accepted diagnoses of schizophrenia orbipolar disorder, Zyprexa’s only approved uses. By law, drugmakers mayonly promote their drugs for diseases in which the Food and Drug Administration has found the medicines to be safe and effective, although doctors may prescribe drugs in any way they see fit.

In response to questions about the information in the documents,Lilly has denied any wrongdoing and said it provided all relevantinformation to doctors and the F.D.A. Lilly has also said it did notpromote Zyprexa for conditions other than schizophrenia or bipolardisorder.

In 2004, a panel of the American Diabetes Association found thatZyprexa caused diabetes more than other widely used antipsychotic drugsin part because it tends to cause much more weight gain. But the F.D.A.has never made a similar finding. Instead, the F.D.A. added a warningin 2003 to the label of Zyprexa and other new antipsychotic drugs abouttheir tendency to cause high blood sugar.

The settlement follows an additional $700 million agreement in 2005covering 8,000 patients, as well as 2,500 individual settlements whosetotal value has not been disclosed, Lilly said. The 2005 settlementvalued each claim at nearly $90,000 per plaintiff, while today’sagreement values claims at more than $27,000 per plaintiff.

The lower value for the new claims comes in part because of theF.D.A. label change, which has allowed Lilly to contend that itadequately warned doctors of Zyprexa’s risks after 2003. The labelchange may also help to protect Lilly from other lawsuits goingforward, drug industry analysts and lawyers say.

In its statement, Lilly said the settlement did not change its viewsthat Zyprexa is a safe and effective treatment for mental illness.

“We wanted to reduce significant uncertainties involved inlitigating such complex cases,” Sidney Taurel, Lilly’s chief executive,said in the statement.

Richard Meadow, one of the lead lawyers for plaintiffs, said thedeal was fair to both sides. “Prolonging this litigation further is inno one’s best interest,” he said.