My oldest Yorkie has some neurotic licking and scratching too. He's always been like this and I've done everything I can. He is a lot better than he used to be, but I think he'll always do it. I think it is a result of the years he spent alone at home. He is a very intense dog and he could lick his paws and his privates for hours! He would lick himself raw...
I haven't found a solution, but there are a couple of things that I do. First, I make sure that there aren't any fleas at home. Fleago the garden and the house or sprinkle diatomaceous earth everywhere. Then, I give him regular baths and I keep him busy. He has three friends now and he hasn't "injured" himself in years. I also taught him to stop on command so that I can stop him when I see him doing it. He stops when I tell him to, but he'll still try his luck.
Try to rule out the causes for Duncan's scratching and licking - it could be allergies, fleas, lack of exercise or boredom. Once you know why he's doing it, you can find ways to get him to stop. Hope that helps!
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