BCG With or Without Gefitinib in Treating Patients With High-Risk Bladder Cancer

DISEASE CHARACTERISTICS: * Histologically confirmed transitional cell carcinoma (TCC) of the bladder meeting ≥ 1 of the following criteria: * Noninvasive papillary carcinoma (Ta) with ≥ 1 of the following characteristics: * Recurrence of bladder tumor(s) ≥ grade 2 within 6 months after transurethral resection (TUR) * Three or more bladder tumors ≥ grade 2 at the time of TUR * Bladder tumor(s) ≥ 5 cm in size and ≥ grade 2 at the time of TUR * Any grade 3 bladder tumor(s) * Carcinoma in situ (Tis) * At least grade 2 tumor that invades the subepithelial connective tissue (T1) * Has undergone TUR of all visible bladder lesions within the past 21 to 60 days with biopsy of the underlying bladder wall for all tumors and cold-cup biopsy of all suspicious areas * No metastatic disease as confirmed by negative radiology within the past 16 weeks, including the following: * Chest x-ray * Imaging of the upper urinary tract by 1 of the following methods: * CT scan, MRI, or ultrasound of the abdomen and pelvis * Intravenous pyelogram * Retrograde pyelogram * No evidence of TCC of the upper urinary tract * No mixed histology of bladder cancer (i.e., TCC and squamous cell carcinoma of the bladder or TCC and small cell carcinoma of the bladder) at the most recent TUR PATIENT CHARACTERISTICS: * ECOG performance status 0-2 * Life expectancy \> 5 years * Negative routine urine microscopy and negative urine culture within the past 14 days * Willing to complete quality of life questionnaires in English or French * Inability to complete questionnaires due to illiteracy in English or French, loss of sight, or other reason allowed * WBC ≥ 3,000/mm³ * Absolute neutrophil count ≥ 1,500/mm³ * Platelet count ≥ 100,000/mm³ * Bilirubin ≤ 1.5 times upper limit of normal (ULN) * AST and ALT ≤ 1.5 times ULN * Alkaline phosphatase ≤ 1.5 times ULN * Creatinine ≤ 1.5 times ULN * Not pregnant or nursing * Negative pregnancy test * Fertile patients must use effective contraception during and for 3 months after study completion * No significant history of cardiac disease including, but not limited to, any of the following: * Uncontrolled high blood pressure * Unstable angina * Congestive heart failure * Myocardial infarction within the past year * Cardiac ventricular arrhythmias requiring medication * No active urinary tract infection * No active infection, including tuberculosis * No serious underlying medical conditions that would impair the ability of the patient to receive protocol treatment * No febrile illness or gross hematuria * No impaired immune response from any cause (congenital, therapy, or disease) * No clinically significant or untreated ophthalmologic condition (e.g., Sjögren's syndrome) * No gastrointestinal conditions (e.g., Crohn's disease or ulcerative colitis) * No history of psychiatric or neurological disorder that would limit study compliance * No other malignancies except for adequately treated nonmelanoma skin cancer, curatively treated in situ cancer of the cervix, or other solid tumors curatively treated with no evidence of disease for ≥ 5 years * No contraindications to spinal or general anesthesia as required for a TUR * No known hypersensitivity to BCG or gefitinib * No history of allergic reactions attributed to compounds of similar chemical or biologic composition to the study drugs PRIOR CONCURRENT THERAPY: * See Disease Characteristics * More than 12 months since prior intravesical immunotherapy (including BCG +/- interferon) * More than 6 months since prior intravesical chemotherapy (including mitomycin C, thiotepa, doxorubicin hydrochloride) * Single dose of intravesical mitomycin C at the time of the most recent TUR (within the past 21 to 60 days) allowed if considered standard care * No other prior or concurrent immune modulator therapy * No prior pelvic radiation * No prior gefitinib * No other concurrent experimental anticancer drugs * No concurrent use of drugs that induce CYP3A4 enzymes that have been shown to significantly reduce plasma concentrations of gefitinib (including phenytoin, carbamazepine, barbiturates, rifampin, or Hypericum perforatum \[St. John's wort\]) * No concurrent grapefruit juice