The short answer is that it is still used in some literature, usually as a generic (and deliberately archaic) term referring to potable medicines of yesteryear, although the term has fallen out of general use in the fields of medicine and pharmacology, outside of medical history. To see why, let's start with a definition from Richard Fortune's The Words of Medicine: Sources, Meanings, and Delights:

Methods for dispensing oral medications in liquid form included the potio ("potion"), elixir {elix.} ("elixir"), tinctura {tinct.} ("tincture"), syrupus {syr.} ("syrup"), solutio {sol.} ("solution"), spiritus {spir.} ("spirits"), concoctio {concoct.} ("concoction"), decoctio {decoct.} ("decoction"), infusum {infus.} ("infusion"), and ptisan.

A potio was simply something that was drunk and is derived from the same Latin verb (poto="drink") as potable. The word in English often carries with it overtones of poison. Elixir, ultimately derived from Arabic, was a term that originated in the days of alchemy. In Chaucer's time it was used either in the sense of "philosopher's stone," which was alleged to be able to turn base metals into gold, or in the sense of a substance that could prolong life. Later it took on teh coonotation of a quack medicine, before finally assuming its technical meaning as a combination of drugs dissolved in a sweetened, flavored alcohol base. Tincture is from the Latin tinctura, meaning "dyeing." It, too, was originally an alchemical concept and meant the "quintessence," "spirit," or "soul" of an object or substance. In its modern meaning in pharmacy, it is a medication, often of plant origin, which is suspended in an alcohol base, often with the addition of tannic acid. Tinctures, incidentally, may be used orally and topically, a common example of the former being tincture of opium (paregoric) and of the latter tincture of benzoin. The idea of tinctures was an old one in medicine, and they were said to be a favorite of Paracelsus. A third very early vehicle for drugs was the syrup, ultimately from the Arabic root sharab (the same root as in "sherbet"), meaning "wine." A syrup refers to a thick sugary vehicle with generally a low concentration of active drug.

"Potion" in the sense of an oral medication was still active into the early twentieth century; it was used, for example, in Chemical Abstracts (1919), but the generally imprecise nature of what constituted a "potion" saw it on the way out as medicine and pharmacology took on a more scientific chemical basis in the 19th and 20th centuries, in favor of more precise chemical terminology describing the actual chemicals/substances involved and method of preparation. Where "legitimate" medicine stepped out, however, "quackery" stepped in - any number of patent medicines were made, marketed, and sold which took a plethora of forms and promised a cure to basically every ill known to humanity (including a few new ones). If you ever get bored, brown through a volume of Nostrums and Quackery from the American Medical Association, which details summary analysis of off-the-shelf "medicines" that fall outside of the The United States Pharmacopeia and The National Formulary; one passage form vol. 2, p.120 the emphasizes the negative connotation of "potion" as synonymous with "fake medicine":

The mental effect produced by brilliant colors in pills and potions is fully realized by the mail-order medical faker, and every man in this business has his tablets made up in unusual shapes and gaudy hues.

One example of a medical use of "potion" that endured into the early 20th century was "potion of Todd" (used for the treatment of respiratory illnesses like bronchitis) - a euphemism for brandy (as in "hot toddy"), sometimes combined with spices in certain formularies. The Practice of Pharmacy (1894), for example, gives the formula:

Potion of Todd.

(Dorvault's.)

Brandy, 6 fl. dr.

Distilled Water, 9 fl. dr.

Syrup, 4 fl. dr.

Tincture of Canella, 1 fl. dr.

Mix.

"Dorvault" in this case refers to the French pharmacopeia from which the recipe was taken.