I think the vet should at least do some kind of microscopic examination to find out what you're dealing with. Is it an ulcer? Does the cat have any other symptoms (fever, etc.)?
I'd stop using the cream for a few days and try just bathing it lightly in hydrogen pyroxide 3%, available at the drugstore, and don't cover it afterwards. If the area is continually moist, that would hinder healing, IMHO.
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