drug: a chemical substance that has a known effect in humans or animals. This term was previously used interchangeably with medicine; however, since drug is often associated with illicit substances, medicine is now the preferred term for many organisations (including the Therapeutic Goods Administration – the Australian Government agency responsible for the regulation of pharmaceuticals)
medication (noun): often used interchangeably with medicine (e.g. he took his medication). This term is favoured by health care professionals, particularly to distinguish it from the practice of medicine. Also the act of prescribing or administering a medicine (to medicate)
medicine: a pharmaceutical substance that has a specific effect in humans or animals, and is used to cure, alter or treat a disease or condition. Also, the practice of healing (e.g. they studied medicine)