GlaxoSmithKline has agreed to pay $40.75m to 37 states and the District of Columbia in a settlement over substandard drug manufacturing processes.

The settlement, announced by the company and Attorney General Roy Cooper, resolves allegations that GlaxoSmithKline and SB Pharmco Puerto Rico used unacceptable development processes at its plant in Cidra, which closed in 2009.

The drugs in question were manufactured between 2001 and 2004, and included anti-nausea medication Kytril, antibiotic ointment Bactroban, antidepressant Paxil CR and diabetes drug Avandamet.

GlaxoSmithKline denies any wrongdoing under the states’ consumer protection laws, and said in a statement that the Cidra plant closed because of a declining demand for the medicines made there.

The firm continued, “The company chose to settle the matter, which it initially disclosed in its 2010 fourth quarter results and its 2010 annual report, to avoid the expense and uncertainty of protracted litigation and trial.”

SB Pharmco Puerto Rico agreed to plead guilty to a felony of releasing adulterated medicines, reports Reuters.