If used, Medical Supplies heal 50 HP to the player. Unlike the candy in Level 4, the player can use the Medical Supply with no penalty. The player need only collect them to beat the level.
Also unlike Level 4, if the player is to replay Level 2 via the Level Select, the Medical Supplies from his/her first playthrough would not be removed, meaning that the player would have unlimited access to medical supplies. However, it wouldn't be particularly beneficial in any way.