If you're lucky, you'll have found an Elixir along the way and not used it.
Use it on him after he uses Reversal, and it's pretty much over.
Should you need to do a little more damage, you can use your healing spells and items on him. Throwing Potions, Cure spells and more at him should make quick work of an otherwise difficult boss. If you need to heal while under the effects of Reversal, Rydia can heal your party with Black Magic. It goes both ways after all. Remember to have Yang use Focus to charge up his attacks while Reversal is active, and everyone should be able to stay occupied.
An alternate strategy is to have Rydia summon Whyt at the start of the fight, before the first use of Reversal Gas. It'll throw Rydia's status out of sync with the rest of the party; this effectively renders her completely immune to Lugae's attacks, at which point, you can just take your time with it.