The research included about 3,500 children from 2008 to 2011 and measured cough and cold medication use before and after the mandated labelling requirement.
"We found that a large number of young children continue to receive over-the-counter cough and cold medications even with evidence of harm, public health advisories from government agencies and mandated labelling requirements for manufacturers," said Jonathon Maguire from St Michael's Hospital in Canada.
In 2009, Health Canada mandated warnings on cough and cold medications advising against use in children under six, based on lack of evidence in their effectiveness and reports of harm and risk of adverse events.
Researchers said although this labelling standard had a small effect on lowering their use in young children (down from 22 per cent before the change), the proportion of children regularly receiving them is still quite high (18 per cent).
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Studies have shown that discouraging use of potentially harmful substances - such as tobacco products - has been helped by placing them behind-the-counter and adding packaging with prominent warning labels.
Researchers believe that similar strategies may be needed to further reduce cough and cold medication use in children.
The study also found that children with younger parents and older siblings were more likely to receive cough and cold medications, suggesting a need for education within this group.