RATIONALE: Drugs used in chemotherapy, such as melphalan, prednisone, and lenalidomide, work in different ways to stop the growth of cancer cells, either by killing the cells or by stopping them from dividing. Giving more than one drug (combination chemotherapy) may kill more cancer cells.

PURPOSE: This phase I/II trial is studying the side effects and best dose of melphalan and lenalidomide when given together with prednisone and to see how well they work in treating patients with newly diagnosed multiple myeloma.

OBJECTIVES:

Primary

• Determine the maximum tolerated dose of melphalan and lenalidomide in combination with prednisone in patients with newly diagnosed multiple myeloma.
• Determine the response rate in patients treated with this regimen. Secondary
• Determine the toxicity of this regimen in these patients. OUTLINE: This is a dose-escalation study of melphalan and lenalidomide followed by a phase II study.
• Phase I: Patients receive oral melphalan and oral prednisone daily on days 1-4. Patients also receive oral lenalidomide daily on days 1-21. Treatment repeats every 28 days in the absence of disease progression or unacceptable toxicity.

Cohorts of 3-6 patients receive escalating doses of melphalan and lenalidomide until the maximum tolerated dose (MTD) is determined. The MTD is defined as the dose preceding that at which 2 of 3 or 2 of 6 patients experience dose-limiting toxicity.

* Phase II: Patients receive oral melphalan and oral lenalidomide as in phase I at the MTD. Patients also receive oral prednisone as in phase I. Treatment repeats every 28 days in the absence of disease progression or unacceptable toxicity.

After completion of study treatment, patients are followed every 3 months for 3 years.

DISEASE CHARACTERISTICS:

• Diagnosis of multiple myeloma

  • Newly diagnosed disease
  • Requires treatment, in the judgment of the treating physician
  • Not a candidate for (or patient declines) autologous stem cell transplantation

• Meets 1 of the following criteria:

  • Measurable disease, defined by any of the following:

    • Serum monoclonal protein ≥ 1 g/dL
    • Urine protein monoclonal light chain ≥ 200 mg/24 hours by electrophoresis
    • Measurable serum free light chains ≥ 10 mg/dL, kappa or lambda, AND κ/λ ratio is abnormal (if serum and urine are not measurable as defined above)

  • Evaluable disease, defined as monoclonal bone marrow plasmacytosis ≥ 30%

PATIENT CHARACTERISTICS:

• ECOG performance status 0-3

• Life expectancy > 3 months

• ANC ≥ 1,500/mm³

• Bilirubin ≤ 2.0 mg/dL

• Alkaline phosphatase ≤ 3 times upper limit of normal (ULN)

• AST ≤ 3 times ULN

• Creatinine ≤ 3.0 mg/dL

• Platelet count ≥ 100,000/mm³

• Not pregnant or nursing

• Negative pregnancy test

• Fertile patients must use 2 effective methods of contraception, including ≥ 1 highly effective method, ≥ 4 weeks before and during study treatment

• No uncontrolled infection

• No peripheral neuropathy ≥ grade 2

• No serious medical condition, laboratory abnormality, or psychiatric illness that would preclude study compliance

• No other active malignancy except for nonmelanoma skin cancer or carcinoma in situ

  - Prior malignancy allowed if treated with curative intent and is free of disease for a period appropriate for that cancer

• No known hypersensitivity to thalidomide

• No known HIV positivity

• No infectious hepatitis A, B or C

• No history of deep vein thrombosis or other medical condition requiring the use of warfarin

• Able to take daily prophylactic acetylsalicylic acid (81 or 325 mg)

PRIOR CONCURRENT THERAPY:

• See Disease Characteristics
• More than 4 weeks since prior radiotherapy for treatment of multiple myeloma
• No prior lenalidomide
• No other concurrent anticancer agents or treatments
• No concurrent steroids except prednisone ≤ 20 mg/day (or the equivalent) for concurrent illness or adrenal replacement therapy
• No other concurrent investigational therapy or agent for treatment of multiple myeloma
• No concurrent warfarin