This phase III trial studies how well pembrolizumab works in treating patients with bladder cancer that has spread into the deep muscle of the bladder wall (muscle-invasive) or urothelial cancer that has spread from where it started to nearby tissue or lymph nodes (locally advanced). Monoclonal antibodies recognizing and blocking checkpoint molecules can enhance the patient's immune response and therefore help fight cancer. Pembrolizumab is one of the monoclonal antibodies that block the PD-1 axis and can interfere with the ability of tumor cells to grow.

DUAL PRIMARY OBJECTIVE:

I. To determine disease free survival (DFS) and overall survival (OS) in all patients with muscle-invasive bladder and upper-tract urothelial carcinoma treated with adjuvant pembrolizumab versus (vs.) observation.

SECONDARY OBJECTIVES:

I. To determine DFS and OS in PD-L1 positive and negative patients with muscle-invasive bladder and upper-tract urothelial carcinoma treated with adjuvant pembrolizumab vs. observation.

II. To characterize the safety and tolerability of pembrolizumab when administered in the adjuvant setting in patients with muscle-invasive bladder and upper-tract urothelial carcinoma.

CORRELATIVE SCIENCE OBJECTIVES:

I. To determine if the 12 immune gene signatures are associated with OS and DFS.

II. To determine if tumor molecular subtype is associated with OS and DFS. III. To investigate whether the diversity of T-cell receptor (TCR) clonotypes is associated with OS and DFS.

IV. To investigate whether persistence of TCR clonotypes is associated with OS and DFS.

V. To determine if tumor burden and neoantigen burden are associated with OS and DFS.

VI. To determine if HLA subtypes are associated with OS and DFS. VII. To conduct exploratory analyses regarding the association of plasma HGF and VEGF levels with IL-10 and IL-17 and OS and DFS and between treated and untreated patients.

PHARMACOGENOMIC STUDY OBJECTIVES:

I. To investigate the effect of PDCD1 single-nucleotide polymorphism (SNP) rs11568821 on severe (grade 3 or higher) immune-related toxicity in the pembrolizumab-treated cohort.

II. To investigate whether other SNPs commonly polymorphic within or near PDCD1 associate with development of pembrolizumab toxicity in the treated cohort.

III. To identify novel germline genetic markers of treatment-related toxicity through genome-wide association analysis of pembrolizumab-treated patients.

IV. To identify novel germline genetic markers that are associated with DFS and OS through genome-wide association analysis.

QUALITY OF LIFE CORRELATIVE STUDY OBJECTIVES:

I. To compare health-related quality of life (HRQL) as assessed by the European Organization for Research and Treatment of Cancer (EORTC) quality of life questionnaire (QLQ)-core (C)30 between patients randomized to pembrolizumab vs. observation.

II. To compare urinary symptoms as assessed by EORTC QLQ- muscle-invasive bladder cancer module (BLM)30 between patients randomized to pembrolizumab vs. observation.

III. To compare patient-reported fatigue, diarrhea, and pain between patients randomized to pembrolizumab vs. observation.

IV. To compare health utilities and quality-adjusted life year (QALYs) between patients randomized to pembrolizumab vs. observation.

V. To compare other scale scores of the EORTC QLQ-C30, EORTC QLQ-BLM30, and European Quality of Life 5 Dimensions 5 Levels (EQ5D-5L) between patients randomized to pembrolizumab vs. observation.

VI. To compare global quality of life, symptoms, health utilities, QALYs, and other scale scores of the three questionnaires between patients randomized to pembrolizumab vs. observation within subgroups defined by each of the stratification factors.

OUTLINE: Patients are randomized to 1 of 2 arms.

ARM A: Patients receive pembrolizumab intravenously (IV) over 30 minutes on day 1. Treatment repeats every 21 days for up to 18 cycles in the absence of disease progression or unacceptable toxicity. Patients undergo a computed tomography (CT) scan, CT urography, and/or magnetic resonance imaging (MRI) throughout the trial. Patients may also undergo a cystoscopy and blood sample collection during screening and on study.

ARM B: Patients undergo observation. Patients undergo a CT scan, CT urography, and/or MRI throughout the trial. Patients may also undergo a cystoscopy and blood sample collection during screening and on study.

After completion of study treatment, patients are followed up every 12 weeks for up 2 years, and then annually for 10 years.

Inclusion Criteria:

• PRE-REGISTRATION ELIGIBILITY CRITERIA

• Histologically confirmed muscle-invasive urothelial carcinoma of the bladder, urethra, upper tract, or lymph node positive (LN+) disease; variant histology allowed as long as urothelial carcinoma is predominant (any amount of squamous differentiation is allowed); any component of neuroendocrine carcinoma is excluded

• Paraffin tissue samples obtained by transurethral resection of muscle-invasive bladder tumor, upper tract resection, or radical cystectomy/nephrectomy/ureterectomy/nephroureterectomy/cystoprostatectomy or urethrectomy must be available; this specimen submission is mandatory prior to registration as results will be used for stratification; specimens from radical/definitive surgery (radical cystectomy/nephrectomy/ureterectomy /nephroureterectomy/cystoprostatectomy and LN dissection) are preferred over transurethral resection, if available

• Patient must fit into one of the following three categories:

  • Patients who received neoadjuvant chemotherapy and pathologic stage at surgical resection is >= pT2 and/or N+ OR
  • Patients who are not cisplatin-eligible (according to >= 1 of the following criteria: Eastern Cooperative Oncology Group [ECOG] performance status of 2, creatinine clearance < 60 mL/min, grade >= 2 hearing loss, grade >= 2 neuropathy, or New York Heart Association class III heart failure and pathologic stage at surgical resection is >= pT3 or pN+) OR
  • Patients that decline adjuvant cisplatin-based or other systemic chemotherapy based on an informed discussion with the physician and pathologic stage at surgical resection is >= pT3 or pN+

• The 7th edition of American Joint Committee on Cancer (AJCC) staging will be utilized; patient must have had radical cystectomy (cystoprostatectomy for men) and lymph node dissection (for bladder primary), or nephrectomy, nephroureterectomy or ureterectomy (for uppertract tumors) or urethrectomy (in addition to a radical cystectomy-either simultaneously or in the past) >= 4 weeks but =< 16 weeks prior to pre-registration; patients who have had a partial cystectomy as definitive therapy are not eligible

• No gross cancer at the surgical margins; microscopic invasive urothelial carcinoma positive margins are allowed; carcinoma in situ (CIS) at margins is considered negative margins

• No evidence of residual cancer or metastasis after surgery; patients with upper tract urothelial carcinoma must have a negative cystoscopy within 3 months prior to pre-registration; if the bladder has been removed a cystoscopy is not required

• No metastatic disease (or radiologic findings "concerning" for metastatic disease) on cross-sectional imaging (according to Response Evaluation Criteria in Solid Tumors [RECIST] version [v]1.1 criteria)

• No active autoimmune disease or history of autoimmune disease that might recur, which may affect vital organ function or require immune suppressive treatment including systemic corticosteroids; these include but are not limited to patients with a history of immune related neurologic disease, multiple sclerosis, autoimmune (demyelinating) neuropathy, Guillain-Barre syndrome, myasthenia gravis; systemic autoimmune disease such as systemic lupus erythematosus (SLE), connective tissue diseases, scleroderma, inflammatory bowel disease (IBD), Crohn's, ulcerative colitis, hepatitis; and patients with a history of toxic epidermal necrolysis (TEN), Stevens-Johnson syndrome, or phospholipid syndrome because of the risk of recurrence or exacerbation of disease; human immunodeficiency virus (HIV)-infected patients on effective anti-retroviral therapy with undetectable viral load within 6 months are eligible

• No current pneumonitis or prior history of non-infectious pneumonitis that required steroids within the previous 5 years

• Patients with vitiligo, endocrine deficiencies including type I diabetes mellitus, thyroiditis managed with replacement hormones including physiologic corticosteroids are eligible

• Patients with rheumatoid arthritis and other arthropathies, Sjogren's syndrome and psoriasis controlled with topical medication and patients with positive serology, such as antinuclear antibodies (ANA), anti-thyroid antibodies should be evaluated for the presence of target organ involvement and potential need for systemic treatment but should otherwise be eligible

• No known active hepatitis B (e.g., hepatitis B surface antigen [HBsAg] reactive) or hepatitis C (e.g., hepatitis C virus [HCV] ribonucleic acid [RNA] [qualitative] is detected)

• No live vaccine within 30 days prior to the first dose of study drug; examples of live vaccines include, but are not limited to, the following: measles, mumps, rubella, varicella/zoster (chicken pox), yellow fever, rabies, Bacillus Calmette-Guerin (BCG), and typhoid vaccine; seasonal influenza vaccines for injection are generally killed virus vaccines and are allowed; however, intranasal influenza vaccines (e.g., FluMist) are live attenuated vaccines and are not allowed

• No postoperative/adjuvant systemic therapy

• No prior treatment with any therapy on the PD-1/PD-L1 axis

• No treatment with any other type of investigational agent =< 4 weeks before pre-registration

• No major surgery =< 4 weeks before pre-registration

• No radiation therapy =< 4 weeks before pre-registration

• No neoadjuvant chemotherapy =< 4 weeks before pre-registration

• Not currently requiring hemodialysis

• Age >= 18 years

• Not pregnant and not nursing, because this study involves an investigational agent whose genotoxic, mutagenic and teratogenic effects on the developing fetus and newborn are unknown

• ECOG performance status =< 2

• Absolute neutrophil count (ANC) >= 1,200/mm^3

• Leukocytes >= 3,000/ mm^3

• Platelet count >= 75,000/mm^3

• Hemoglobin >= 9 g/dL or >= 5.6 mmol/L

• Total bilirubin =< 1.5 x upper limit of normal (ULN)

  • Bilirubin for patients with Gilbert's =< 3.0 x ULN

• Calculated (calc.) creatinine clearance >= 30 mL/min (using either Chronic Kidney Disease Epidemiology Collaboration [CKD-EPI] equation or Cockcroft-Gault formula)

• Aspartate aminotransferase (AST)/alanine aminotransferase (ALT) =< 3.0 x upper limit of normal (ULN)

• Serum albumin >= 2.8 g/dL

• For women of childbearing potential only: a negative urine or serum pregnancy test done =< 7 days prior to pre-registration is required

• REGISTRATION ELIGIBILITY CRITERIA: Results of central PD-L1 testing available; Q2 Solutions will forward the PD-L1 results to the statistical center and the statistical center will notify the site that the result is available; since the results with be blinded to the site the notification from the Alliance registration/randomization office will serve as a confirmation of this eligibility criteria; after sites receive the confirmation e-mail from Alliance they can register the patient