My friend was an idiot.

The fear of things that are not real is called anxiety. You're fuelling their anxiety by suggesting that their friend can go to jail. On what grounds would he go to jail, is there any evidence that he was involved in a drug deal to begin with? Where are the drugs? Even if the police wants to find you, do you think moving to a different accomodation will help you? By law, they will take your passport at the reception everywhere, they register where you are and put it in a database, the police knows exactly where foreigners are. They'd just waste their time and money. If the friend doesn't feel sick or something, it's best if they just accept this as a life lesson and move on with their live, enjoy the rest of their trip and stop panicking over non-issues.