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The drug at the centre of the Keswick School inquiry is an illegal anti-depressant containing diazepam.
Head teacher Mike Chapman said two Year 9 pupils had been permanently excluded and a further 15 suspended.
Cumbria Police said it had arrested a 14-year-old boy from Keswick on suspicion of distributing drugs.
'Level of naivety'Mr Chapman said he was confident the drug taking had been an "isolated incident".
He said: "The school has acted swiftly and effectively to immediately deal with this illegal and unacceptable behaviour.
"We've conducted a thorough investigation, interviewing a large number of pupils, mostly from Year 9.
"We're confident that this has been an isolated incident where peer pressure and a lack of common sense from a number of pupils has led to them being swept along into being persuaded to try this Class C drug.
"There seems to have been a high level of naivety here - many were not aware of the drug's effects before taking them."
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