Pills for anything from the common cold to diabetes or cancer can be embedded with tiny ingestible chips that keep track of whether a patient is taking their medicine on time.

The digital feedback technology, devised by Redwood City, California-based Proteus Digital Health Inc, can also prompt patients to take their medicine and even ask them to take a walk if they have been inactive for too long.

"Overall, people only take their medications half of the time ... adherence is a really big issue across all treatments," Eric Topol, chief academic officer of Scripps Health, a non-profit medical service provider, told Reuters.

Some patients might not like their pill-taking being tracked but the system can help manage patients' complicated medicine routines, such as diabetes or heart conditions.

"This is a way to have a "friend" helping look after me, since my doctor can't be there most of the time," said Kelly Close, a diabetes patient and the founder of diaTribe, a newsletter for people with diabetes. She has not yet used the pill.

The sensor was last month approved by the U.S. Food and Drug Administration and Proteus has attracted investments from Swiss drug giant Novartis and Japanese drug firm Otsuka Holdings Co Ltd.

Other investors in the company include medical device companies Medtronic Inc and St. Jude Medical Inc, and chipmaker ON Semiconductor Corp.

"The point of this technology is not to say you are being a bad patient. The point is to have accurate data," Proteus' co-founder and Chief Medical Officer George Savage said.

PILL TELEGRAPH

The swallowed sensor is linked to a skin patch worn on the patient's torso, which captures the report sent by the sensor.

About the size of a grain of salt, the sensor has no battery or antenna and is activated when it gets wet from stomach juices.

That completes a circuit between coatings of copper and magnesium on either side, generating a tiny electric voltage for a few minutes.

The skin patch records the digital message, along with the patient's heart rate, body angle and activity, and sends the data to a bluetooth-enabled device such as a phone or computer.

"Think of this as a high-tech version of an old-style Morse code telegraph key," Savage said.

The data is then uploaded to a computer network for viewing by patients, caregivers and physicians.

The system allows users to set up alarms to remind them to take medicines or to issue an alert if the patient is inactive for a certain time.

Novartis is testing Proteus' sensor in renal transplantation patients -- a group that is required to maintain a strict regimen of anti-rejection drugs.

"Study results show that when used properly, the Proteus system was observed to monitor patients' medication-taking behavior with very high accuracy," Novartis spokeswoman Julie Masow said.

The Swiss firm has made a $24 million upfront payment to access the technology, with royalties due to Proteus from future sales.

Savage said Proteus was working on generic versions of big-selling drugs for type 2 diabetes, congestive heart failure and mental health disorders that would incorporate the sensor. Savage did not name the drugs.

Testing included 254 people using the system for a collective 3,828 days involving patients being treated for tuberculosis, congestive heart failure and hypertension, Proteus said.

TRACKING TB

Proteus has a partnership with the Bill and Melinda Gates Foundation and China's Center for Disease Control and Prevention to test the technology in tuberculosis treatment.

The Gates Foundation awarded a $560,000 grant to Proteus to support a pilot study of the technology in Chinese TB patients.

Highly contagious tuberculosis is typically treated by powerful antibiotics that have unpleasant side effects, leading to patients dropping treatment and putting others at risk.

Health experts say that raises the question of acceptance of the system among some patients who would most benefit from it.

"People may not want to wear the patch and have the medications because they might feel like big brother is watching," Topol said.

(Editing by Rodney Joyce)

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