As if Excitotoxins and Pesticides in our food wasn't deadly enough, scientists are just now finding that there is another environmental enemy waiting to wreak havoc with our bodies and minds: drugs in our water. Ironically, we won't have to wait for terrorists to poison our water supply: we've got a great head start doing it to ourselves.
The government estimates that at least 270 million pounds of drugs are dumped into our nations water supply every year. (The actual number if probably much, much greater.) And, yup, it's all legal. If a medical company, hospital or drug manufacturer dumped pharmaceuticals onto the ground they'd probably have a dozen governmental agencies after their throats. However, if the same companies flush or rinse the same pharmaceuticals, there is no penalty whatsoever. These drugs also get into the water supply through many ways, of course, including us urinating, city dumps leaking into landfills, flushing drugs down toilets as well as various industrial processes that use drugs for manufacturing.
Other parts of the world have been more aware of the issue. But in the U.S., this all started when the AP last year (2008) reported trace amounts of various drugs (sex hormones, antibiotics, anti-convulsants just to name a few) in various city water supplies. Further studies, some around the globe, have verified the same phenomenon and it is now estimated by American researchers that they have tested the water supplies of around 60 million Americans, i.e. there is little doubt at this point that the lion's share of communities are affected. (There are many other nasty things in water besides drugs: see the Safe USA Water site.)
And, for any non-American readers: keep in mind that this is a global phenomenon. It all started about ten years ago when German researchers found cholesterol-lowering drugs, analgesics and NSAIDs in their water supply. Canadian and British scientists have found similar results showing that this is clearly a problem for all societies with substantial pharmaceuticals, industrialization and manufacturing.
So how concerned should we be. Let me quote from the 4/19/2009 AP Press release: "Researchers have found that even extremely diluted concentrations of drugs harm fish, frogs and other aquatic species. Also, researchers report that human cells fail to grow normally in the laboratory when exposed to trace concentrations of certain drugs. Some scientists say they are increasingly concerned that the consumption of combinations of many drugs, even in small amounts, could harm humans over decades".
Another reason that there is such widespread concern is the kind and quantity of drugs found. Here's a partial listing:
This list could go on and on as you can well imagine, but you get the idea: if you drink tap water, you may are putting yourself at potential risk because you are almost for sure ingesting regular amounts of various drugs. (Don't tell the drug companies or they'll probably want a cut!) These are often potent and sometimes even toxic chemicals. Our advice: stick to red wine and green tea made from bottled water!
NOTE: Scientists have long been concerned at the level of estrogens in drinking water. Researchers recently found that these estrogens do not come from pharmaceuticals but rather dairy, soy, animal waste (used as fertilizer) and human urine.  Pretty comforting, eh?
You should also be aware that the chlorine in tap water is associated with a slight risk of bladder and rectal cancers. A 1992 meta-analysis found a linear-like relationship between chlorinated water consumption and these deadly cancers.  Apparently, chlorine is great for disinfecting pools and keeping the malaria and typhoid in check, but not so good for GI tissues. NOTE: Did you know that baby carrots are cut from crooked and malformed carrots and then washed in a chlorine, i.e. bleach solution? It might just be worth the extra minute or two to peel a regular carrot! (Carrots, until recently, were on the "worst pesticide" list as well.)
The Environmental Working Group recently published a study showing that 25 of 35 cities had overly elevated levels of the carcinogen hexavalent chromium in drinking water.  This is the same chemical was center stage in the famous Erin Brokovich case in soutern California. And, by the way, the utilities have absolutely no plans to remove this any time soon. Furthermore, hexavalent chromium is not going away any time soon: it is prevalent in many industrial compounds and processes, including numerous steels and dyes.
CAUTION: There are other reason to be very wary of tap water. Drug residues may actually be the least of your worries. Tap water also generally contains high levels of nitrates, which is dangerous for pregnant women, and is a potential endocrine disruptor for guys. Besides that, city tap water often contains substantial aluminum, which produces damage to the brain similar to Alzheimers when consumed for an extended period of time. And remember: this is not just an American phenomenon.
1. Buy Water. Buying filtered water is probably the best solution assuming it is a reliable supplier of course.
2. Home Water Filter System. These systems are known to remove chlorine and pesticides and so should filter out any drugs of a similar size or larger. However, this has not been tested yet and no one knows how reliable these kind of systems will be. 
1) Morris, The American Journal of Public Health, Jul 1992
2) Consumer Reports on Health, Sep 2009, p. 12.
4) Environ Sci Technol, 2010 Oct 26, [Epub ahead of print], "Are Oral Contraceptives a Significant Contributor to the Estrogenicity of Drinking Water?"