Formication (note the 'm')
Formication is the sensation of bugs crawling on the skin. It is a form of tactile hallucination, associated with drug misuse (e.g. 'cocaine bugs'), alcohol withdrawal (delirium tremens), and delusions of parasitosis (belief that you are infested by parasites e.g. worms), amongst other things.
Scratching excessively can result in ulcers and scarring in 'easy to reach places', such as the forearms.