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I'm a big fan of holistic medicine, and I've had some really good luck with some of these, which are actually remedies for itching, but seem to work on flaky skin as well:
*For some itches, we suggest soaking in a baking soda bath. Adding 1 cup of baking soda to a tub of warm water and then soaking 30-60 minutes. Take dog out and let them air dry (this works best if done outside or in an area where there isn't carpeting as wet dogs drip...a lot). Local itches can be covered with a paste of 3 parts baking soda to 1 part water.
*Oatmeal is an old favorite. Adding 1-2 cups of finely ground oatmeal to a warm bath sometimes can calm even the most irritating of itches. Just make sure the water isn't too hot, or you'll have breakfast for a week in your tub!
*Lots of folk remedies call for using lemon to help with itching. They contain anesthetic and anti-inflammatory properties that may help reduce itching. If nothing else, your dog will smell good!
*Splashing the affected skin with basil tea can help reduce itching as well. Basil contains large amounts of a substance called 'eugenol', which is a topical anesthetic. To make the tea, place 1/2 ounce of dried basil leaves in a 1 pint jar of boiling water. Keep it covered to prevent the escape of eugenol into the air. Allow to cool, then dip a clean cloth into the tea and apply to itchy skin as often as needed.
*Mint tea works about the same way, except the anti-itch property is menthol, not eugenol. To make the mint tea add 1 ounce dried mint leaves to 1 pint of boiling water. Cover and allow to cool. Strain the leaves out and then dip the clean cloth in the tea and apply to the itchy areas.
*If you're saving the basil for spaghetti sauce and the mint & lemons for a glass of lemonade, you can use thyme tea. Once again use 1/2 ounce dried thyme leaves and 1 pint of boiling water. Cover and cool. Strain and use clean cloth to apply to affected areas.
*Last but not least is the old standby, aloe vera. The same properties in aloe vera that help with burns also work like a dream on itches. Snap off a leaf, slice it down the center and rub the gel on the itch.
I hope this helps!!
The fact that both your pups are coming down with the same thing really makes me think it could be mange.
If that is the case, how well treatment goes will depend on the type of mange mite they have. There are actually 2 types: Demdex and Sarcoptes and you can find more information here: http://www.marvistavet.com/html/body_demodectic_mange.html
I would absolutely ask your vet to do a skin scraping to at least find out if one of these little guys is the problem.