Himanshu expounded:

Can anyone confirm that it is Botrytis? Here are some pictures

http://home.comcast.net/~hgohel/Peony/PeonyDisease.htm

Powdery mildew.

Anyway, what should be the treatment for this now? Should I apply
something and/or cut off everything on the plant that has the disease
(which won't leave much at this point).

Don't worry about it, it's cosmetically ugly but won't hurt the plant.
Cut it back this fall and get rid of the foliage (don't compost it,
generally speaking, I always toss the peony foliage. Not worth the
chance of spreading anything; powdery mildew happens when it's
particularly dry and hot out). You may or may not get it back next
summer, but it won't hurt anything.
--
Ann, gardening in Zone 6a
South of Boston, Massachusetts
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