The text clearly states, "the prayer of faith shall save the sick". It no where states that the "medicine saves the sick". The medicinal properties of the oil are not the focus of the passage. In fact, the very idea that the oil used was medicinal in nature is a faulty interpretation. Let's see where else oil is used to anoint for healing. Christ "gave them [the disciples] power against unclean spirits, to cast them out, and to heal all manner of sickness and all manner of disease" (Mt 10:1). The parallel passage in Mark states that Jesus "began to send them forth by two and two; and gave them power over unclean spirits" (Mk 6:7). "And they went out, and preached that men should repent. And they cast out many devils, and anointed with oil many that were sick, and healed them" (Mk 6:12-13). Would anyone claim that the disciples went around healing people with medicine? No reputable commentator ever dared to state such an absurdity. Why would we suddenly strip James 5:14-16 of its miraculous power, unless to read in faulty cessationalist theology (theology which claims that miraculous healing no longer occurs)? The "prayer of faith" will save the sick - not the oil!
Now, let's look at the passage in Greek. The transliteration is:
kai h euch thv pistewv swsei ton kamnonta
So to translate word for word would be:
kai (AND) h (THE) euch (PRAYER) pistewn (OF FAITH) swsei (SHALL SAVE) ton (THE one) kamnonta (BEING SICK)
pistewn is a genitive (case of ownership/possession). Only the context can define whether a genitive is objective or subjective (ie. The prayer possesses faith, or the faith possesses prayer). In this case, the only rendering that makes sense is that the prayer possesses faith.
swsei is a future active indicative, which means the prayer (the subject of the verb) causes the healing actively and that it definitely, not potentially, occurs (indicative).
So we must interpret it literally just as it's stated (wow! go figure - literal interpretation. What a novel idea!!)
"The prayer of faith (or possessing faith) shall save (or in context, "heal") the sick"
I prefer "heal" in context since the verb swzw is translated as "healed" or "made whole" in other passages with a context of physical healing (see Mt 9:22, Mt 14:36, Mk 5:23, Lk 8:36,50 KJV).