I'm thankful you've grown uncomfortable with this, because gossip never helps anyone; in fact, it always hurts. No wonder the Bible condemns those who are "gossips and busybodies, saying things which they ought not" (1 Timothy 5:13, NKJV).
The first step is to be sure you don't participate in your friends' gossiping or join in what they're saying about someone. You may not be able to stop them from gossiping (although in time perhaps you can), but you can stop yourself. And by your reaction you'll let them know you don't approve of it, nor do you share in their delight over someone's supposed failures.
Instead, ask God to help you be positive in your conversation and to bring up good things instead of things that aren't true or tear others down. The Bible says, "Let your conversation be always full of grace, seasoned with salt, so that you may know how to answer everyone" (Colossians 4:6).
But I also urge you to pray for your friends, asking God not only to turn them away from what they're doing, but also to help them realize their need for Christ's forgiveness and grace. Has it ever occurred to you that God may have placed you with this group not only for friendship's sake, but also to be a witness to Christ's love and new life?
Make sure of your own commitment to Christ as your personal Savior and Lord, and then ask Him to help you be an influence for good on those around you.