NEW YORK, July 30 (Reuters) - A federal appeals court on Thursday revived portions of nationwide litigation in which consumers accused drugmakers such as Procter & Gamble ( PG ) and retailers such as CVS of selling billions of dollars of over-the-counter decongestants that didn't work.

The litigation comprised about 100 lawsuits filed after a U.S. Food and Drug Administration advisory panel found in September 2023 that oral phenylephrine, an ingredient in such products as Vicks NyQuil Severe Cold & Flu and Advil Sinus Congestion & Pain, was no better than a placebo.

A three-judge panel of the 2nd U.S. Circuit Court of Appeals in Manhattan said the Federal Food, Drug and Cosmetic Act preempted most of the consumers' state law-based claims, saying the defendants followed FDA labeling requirements.

But the court revived claims over decongestants labeled "maximum strength," because various defendants added that phrase on their own. It also revived claims over brand-name drugs approved through the federal New Drug Application process, because the defendants could have updated labels to reflect the latest science.

"The limitations on consumer plaintiffs' state law remedies may appear unfair, particularly when the FDA's own agency review has confirmed that oral PE does not work as a decongestant and when studies have impugned oral PE's efficacy for 20 years," Circuit Judge Denny Chin wrote. "The fix, however, must flow not from litigation but from the FDA."

LITIGATION 'FAR FROM OVER'

Thursday's decision also said consumers lacked standing to pursue a civil racketeering claim accusing the defendants of defrauding the public and the FDA.

Jonathan Selbin, a lawyer for the consumers, said they were "obviously disappointed" with parts of the decision and reviewing their next steps.

"For over a decade these manufacturers made billions of dollars selling products with a decongestant that they long knew - in many cases based on their own studies - was entirely ineffective at decongesting," he said. "This case is far from over."

Procter & Gamble ( PG ) makes Vicks NyQuil Severe Cold & Flu, while Haleon ( HLN ) makes Advil Sinus Congestion & Pain. Some of the other defendants included Bayer, GSK, Kenvue ( KVUE ), Costco, Target ( TGT ), Walgreens and Walmart ( WMT ), as well as CVS.

 Lawyers for those companies did not immediately respond to requests for comment.

The appeals court returned the litigation to U.S. District Judge Brian Cogan in Brooklyn, who dismissed it in October 2024.

In November 2024, the FDA proposed removing oral phenylephrine as an ingredient in over-the-counter oral cold medications.