Two brothers arrested in connection with a large-scale drug distribution ring each pleaded guilty yesterday in U.S. District Court to conspiracy and drug distribution charges.

Clarence Watts Jr., 38, of 702 Camelot Way, Oxon Hill, and Thomas Watts, 37, of 5611 61st Place, Riverdale, were charged after undercover investigators staged a discount sale of the drug, Preludin. Three other men have entered guilty pleas in the case.

Assistant U.S. Attorney George J. Terwilliger III said in court yesterday that a government informant contacted Clarence Watts by telephone in early June and said a large quantity of the drug would be available for sale at $3 a pill or $4 less than the going illegal rate for wholesale Preludin. Terwilliger said that during the conversation, which was tape-recorded, Clarence Watts told the informant that he would notify his brother about the sale.

Subsequently, Thomas Watts and the informant drove to a motor inn on Bladensburg Road NE, where Thomas Watts was videotaped making two separate purchases of Preludin pills from undercover agents. During that session, Thomas Watts was recorded paying more than $17,000 cash for the purchases, which he said were for himself, Clarence Watts and a third man, Terwilliger said.