The chip works by being imbedded into a pill. Ingest it at the same time that you take your medication and it will go to work inside you, recording the time you took your dose. It transmits that information through your skin to a stick-on patch, which in turn sends the data to a mobile phone application and any other devices you authorize.
http://money.cnn.com/2012/08/03/technology/startups/ingestible-sensor-proteus/index.htm?source=cnn_bin
http://money.cnn.com/2012/08/03/technology/startups/ingestible-sensor-proteus/index.htm?source=cnn_bin