We are allowed to fail or withdraw - they have the same consequences - twice in our academic careers. You can't fail the same course twice, if you do, you are welcome to change majors or to apply to a different CON. If you fail, say, MS 1, you will not be able to enroll in MS 2 the next semester. Instead, you have to wait until the next time MS1 is offered - could be the next semester, or you may have to sit out. You cannot progress with your clinical group if you fail any of the "core" classes - Fundamentals, MS1, MS2, Psych, OB, or Peds. Your spot in the next MS1 class is only open after all the students who are "in sequence" have already registered, so if they all passed from the semester before you have to sit out again. Plus, when you progress to MS 2 if you do pass, you will have to hope someone else failed and there is an open clinical spot.
I don't know a single person who has actually done any of this. I do know people who have dropped and/or failed non-core classes, so as to pass their core classes and not get "out of sequence." However, then they have to tack that class on again in the next semester, and our program gets tougher as you go. The only girl in our group to actually fail out so far dropped pharm the first time she took it, reenrolled in the fall, and failed. She is no longer welcome in the program, they do not make exceptions.