Children sometimes get in repetitive stages. She might grow out of it. If she doesn't then maybe u should call her pediatrician. Good luck.
Someone else on this site wrote that she used to rub something across her upper lip as a self-soothing mechanism all the time when she was little, and that to this day when she wants to concentrate on a test or something like that, she will rub the end of a pen across her upper lip. It might be that kind of thing, a way to self-soothe. I would try not to make a big deal out of it, except maybe to find her a small fuzzy toy or one of those hankie-sized soft blankets, and let her use that, so she won't be tearing at cotton all the time. Good luck!