Question

Act 4 what medicine is iago referring to? what might this imply

Answer 1

In Act IV, Iago references his "medicine," which is doing its work.

He is referring to the rumors he started involving Desdemona. He says that this "medicine" is the way to catch "credulous fools" -- meaning that Othello is gullible enough to believe the lie Iago started. 

With his medicine, or his lies, Iago is bringing about Othello's destruction. He is happy to see Othello believing Desdemona is unfaithful.