At this point there is no sense in going to a vet that is only going to guess about the problem. There needs to be testing done. The skin needs to be scrapped and looked at under a microscope. There are tests that can be done to pinpoint exactly what is wrong.
If it is mange the breeder you bought your pup from owes you some money. Did the breeder offer you any help as far as treating the problem?
There are a few different types of mange and they need to identify which kind it is in order to treat it properly.
Find out where the nearest specialist is. Usually the veterinarian colleges have lots of different well trained specialists for the different body systems.
It may be an expense for you but at least you will find a solution instead of continuing the trial and error thing that has been building up the bill.
The flea powder could very well have made things worse by drying out the skin. Don't bother with the oatmeal shampoos or other things that claim to help dry skin or itchy skin. Oatmeal actually dries the skin more. Most of those shampoos don't really have much oatmeal in them anyway. It is just an advertising thing.
Find good all natural shampoo and conditioner that are free of sulfates and other chemicals. Your pups need the soothing of natural products that actually help bring back the natural ph and help let the skin start to heal once the offending substance is removed.
There are a few good brands out there. Personally, I use the Yorkie Splash and Shine products that have been wonderful for my pets. It is made by a small family company.
Yorkie Splash and Shine
I found out about the YSS products here at Yorkie Talk. My groomer likes to use WEN on her long haired clients and that works wonderfully, too. It is a bit pricey so that treat is usually reserved for the once every 4 months trip to the salon.
Please keep us informed on how you and your babies are doing.