Learn English – Meaning of “then as xxx is not so much that”

I'd recommend parsing sentences (also known as bracketing sentences or diagramming sentences). It could be fun. And it will help you understand difficult sentences much more easily.

Here is your original sentence:

The remarkable thing about many of the medicines dismissed then as 'snake oil' is not so much that they failed to live up to the outrageous claims made for them - those that weren't harmless coloured water could be positively dangerous.

Here is an equivalent sentence, but with symbols instead of secondary expressions (which are modifying the main ideas or clauses):

The remarkable thing about X is not so much that Y - Z.

Much simpler, right?

What are X, Y, and Z, then?

X = many of the medicines dismissed then as 'snake oil'
Y = they failed to live up to the outrageous claims made for them
Z = those that weren't harmless coloured water could be positively dangerous

X is just a noun phrase. What's the remarkable thing about? It's about X. It's about "many of the medicines". It's about "many of the medicines (that were) dismissed (back) then". It's about "many of the medicines (that were) dismissed (back) then as 'snake oil".

Y is just a clause, which I believe that it's now easy for you to understand. Z is also just another clause, which could be written as a standalone sentence as well, if the writer wanted to. The dash was used to make the thoughts more coherent.

My main point is that then as 'snake oil' is not so much that is not a single unit in your sentence. (Technically, this is a non-constituent. A constituent is a group of words that functions as a single unit.) That's why you couldn't understand the sentence. It's because you group words the wrong way. How can we remedy that? Learning how to parse sentences would be a good idea.

Trust me. Parsing sentences is fun!