I'm not sure that I'd want to put meds (pill form, as opposed to capsules) in a bag. No protection from being crushed. If one is supposed to take one 1mg. pill per day, but your pills have accidently been reduced to powder in a bag, how would you know, easily, what is 1mg.? A rigid container offers better protection and a cotton ball can keep the pills from breaking up due to vibration.
Thanks to readyone for mentioning the second label from the pharmacy thing. I had tried asking them for smaller bottles, but even the smallest size bottle had the people-proof lid (which adds significantly to the bulk) and they said they were "required" to dispense all meds with those lids. "Required" by whom, I don't know. Could be state law or just store policy.
Even if one uses one of those keychain-type aluminum viles whose diameter is so small that a label applied to the outside would have serious overlap, one may be able to roll up the label and place it inside the vial (just a thought).