Hello - thanks for asking your question.
Without seeing the lesion myself, it is impossible to give a definitive diagnosis. You may also want to consider asking this question in the dermatology forum.
Eczema is always a possibility. You may also want to consider other forms of dermatitis. If you use a condom, latex dermatitis is known to cause irritation in people who are susceptible.
Irritant contact dermatitis should also be considered. Again, steroid creams and lubricants would help this. This is likely why the KY gel to the area helps.
Steroid creams would help in the acute phase. Because the area is sensitive, you may want to inquire about a medication called Elidel (by prescription) which can help in refractory cases of eczema.
To answer your question, to treat this successfully, you have to determine the cause. A dermatology consult would help - a biopsy would give a definitive answer. If it is caused by dermatitis or eczema, protecting the area with a lubricant during intercourse (as you are doing), seems reasonable.
Followup with your personal physician is essential.
This answer is not intended as and does not substitute for medical advice - the information presented is for patient education only. Please see your personal physician for further evaluation of your individual case.
Thanks,
Kevin, M.D.