Drug toxicity refers to the level of damage that a compound can cause to an organism. The toxic effects of a drug are dose-dependent and can affect an entire system as in the CNS or a specific organ such as the liver.
The causes of drug toxicity can be organized in several ways and include mechanism-based (on-target) toxicity, immune hypersensitivity, off-target toxicity, and bioactivation/covalent modification.
All compounds are toxic at high doses and all are safe at very low doses.
The first context of toxicity is on-target (or mechanism-based) toxicity. That is, the toxicity is due to interaction of the drug with the same target that produces the desired pharmacological response.
The concept is not one of competitive inhibition but rather that the biological response that the drug exhibits upon binding to its target is the same one that produces both the efficacious and the toxic effects.