Honestly, I have never heard of a cat tearing at his legs like this for arthritis. Usually, this level of chewing is due to a problem with itchiness. Also, if a cat has arthritis bad enough to make him chew at himself...he really should not walk normally. He should show visible signs of stiffness and pain when walking. So, I would really recommend taking him to a different vet for a second opinion about what is causing him to chew at his rear like this.
The most common reason that a cat is going to constantly chew at their fur in this specific area is flea infestation. Your veterinarian should thoroughly evaluate your cat for the presence of fleas, and the kitty should be on a monthly safe and effective flea preventative such as Advantage, Frontline, or Revolution. Even if you do not see any fleas on your cat, if she is allergic to the flea saliva, then just one flea on her can drive her absolutely crazy. For this reason, all cats and dogs in the house should be on an effective montly preventative product. In some cases, cats can cause themselves a secondary bacterial infection in their skin (pyoderma) which needs to be treated with oral antibiotics for several weeks.
Other common causes of this behavior in cats are feline scabies and cheyletiella. Scabies and cheyletiella are both mite infections that can be diagnosed with a test at the veterinarian called a skin scraping. This is treated with oral or injected ivermectin given over the course of several weeks.
In some cases, cats do this activity as an anxiety or compulsive disorder. This usually responds to treatment with serotonin reuptake inhibitors such as fluoxetene and paroxetine. In some cases tricyclic antidepressants such as amitriptyline are efficacious.
I am attaching some client information handouts that I use in my practice that discuss these conditions in more detail. I hope that you find them useful.Click HereClick Here 2
I hope that this information is of help to you, and that your kitty feels better soon. Please let me know if I can be of further assistance.