DANBURY, Conn. (AP) _ A teen-ager who received a $300,000 award in a medical malpractice settlement is headed to prison after reportedly admitting he squandered $175,000 of the money on cocaine for himself and his friends.

David Brown was convicted Wednesday of possession of one ounce of cocaine valued at $6,000, and Danbury Superior Court Judge John J.P. Ryan sentenced him to two years at the Cheshire Correctional Center.

Assistant State's Attorney Robert Brunetti, who recommended the jail term, described Brown's case as a ''tragic misfortune.''

Brown received the $300,000 award in March 1984 as a settlement from a medical malpractice claim for treatment of a broken arm, which was left with a 70 percent disability, court officials said.

He told authorities that he had squandered more than half on cocaine and said all but $5,000 of the remainder was spent ''high living'' and presents for his family, according to the Danbury News-Times.

A high school dropout, Brown was arrested in November in a drug raid at a Danbury motel. According to court documents, police had received a tip from motel employees, who reported finding a disconnected smoke detector and what they believed was drug paraphernalia in an unoccupied room.

Brown was charged with possession of cocaine with intent to sell, but the charge was later reduced to possession.