They have been refused bail and could spend up to three years in prison awaiting trial.
With the stress of their ordeal clearly visible on their faces, Melissa Reid, from Lenzie in East Dunbartonshire, and Michaella McCollum, of Northern Ireland, were taken to a judicial building in Lima last night for an administrative hearing before a judge.
McCollum's lawyer Peter Madden said they were effectively beginning a prison sentence as the pair were told in court it was unlikely they would be granted bail,
Mr Madden said: "Their main concern at the minute is that they may be separated, sent to different prisons."
"They are very concerned that might happen. They did not know each other before this started, they have now become best friends."
The pair appeared shaken and subdued as prosecutors laid out the case against them.
They have now spent more than a fortnight in jail since being arrested while trying to board a flight to Madrid earlier this month.
Both are accused of trying to smuggle cocaine worth £1.5million out of Peru in suitcases.
Neither of the women, who are both 20, appeared to have been given access to their belongings and had swapped clothes since their last court appearance on Tuesday.
Since their arrest they have been kept in holding cells and will have slept on bare mattresses with little access to amenities.
Yesterday's appearance was the latest stage in a judicial process which may take years, and images beamed from the courtroom showed both looking frail and tired as they listened to the Spanish-speaking prosecutor discuss their case.
The hearing was the first time this stage of a trial had been shown on TV in Peru, although it is unsure if that is a coincidence or in response to the massive media attention the case has attracted.
Both women say they were forcibly recruited as drug mules by an armed gang while working in bars on the Spanish island of Ibiza.
They say they travelled to Peru under duress.
However, prosecutors said this story was "void" and "incoherent", and produced pictures taken from a camera owned by Melissa which show the pair relaxing at tourist spots.
Lawyers claimed this proves both women were not under duress, and questions were raised over why the girls did not ask for help.
However, the pair's legal team, who conversed with their clients throughout the hearing, stuck to the story.
They have said that the women will identify the gang behind the smuggling scheme in court.
Drug trafficking in Peru carries an average sentence of eight to nine years in prison, but there are harsher sentences for being part of a criminal organisation.
Both women have now been taken to one of the country's two prisons.