The most common and most likely answer to this crossword clue is the 8 letter word POULTICE
I've seen this crossword clue in Financial Times
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More clues leading to the result POULTICE
Buddy explains!
The straight part
We know that "Medicated dressing" is the straight/definition part of the clue. The straight part is often a synonym or definition, in this case medicated dressing = poultice.The cryptic/wordplay part
In cryptic crossword there's often an wordplay/cryptic part as well.This part involves a more complex hint, such as an anagram, homophone, hidden word, etc.
Sadly, We don't have an explanation for this specific crossword clue yet.
What does POULTICE mean?
POULTICE noun- A soft, moist mass applied topically to a sore, aching or lesioned part of the body to soothe. A poultice is usually wrapped in cloth and often warmed before being applied.
- To treat with a poultice.