Midostaurin and Azacitidine in Treating Elderly Patients With Acute Myelogenous Leukemia

Inclusion Criteria * Patients must have histologic proof of active AML at time of enrollment * Phase I and II portion: Subjects of any age with untreated AML, if not candidates for standard induction chemotherapy or with poor risk AML (i.e. preceding MDS, myeloproliferative syndromes, leukemia due to cytotoxic chemotherapy for another condition, adverse cytogenetics or complex karyotype), or any subjects \> 70 years of age with untreated AML. Acute promyelocytic leukemia (FAB M3) is excluded * Please note: prior intensive induction therapy for acute leukemia is allowed only in the phase I portion of this study • PHASE I PORTION ONLY: Patients of any age who have received no more than one prior attempt at induction chemotherapy (and may have received treatment consolidation), must have recovered from acute toxicities of therapy and be \>= 4 weeks from last dose of cytotoxic treatment; patients who have received prior autologous or allogeneic stem cell transplantation are not eligible; patients may have received 1 or 2 cycles of cytarabine-based therapy as attempted induction. * Phase II portion: Patients must have not received any prior intensive induction therapy for AML. * Intensive induction includes standard induction chemotherapy such as 7 \& 3, high dose cytarabine, mitoxantrone-etoposide, low-dose subcutaneous cytarabine. * Allowed "non-intensive" prior treatments for pre-existing hematologic conditions (i.e., MDS, chronic myelomonocytic leukemia \[CMML\]) will include: hydroxyurea, thalidomide, hematopoietic growth factors, Zarnestra, Lenalidomide, arsenic, Imatinib, and corticosteroids, suberoylanilide hydroxamic acid \[SAHA\] inhibitors; hydroxyurea is allowed up to 24 hours before initiating treatment and to control blood counts during the first cycle of chemotherapy after azacitidine has completed; a minimum of 4 weeks must have elapsed since the administration of thalidomide, Zarnestra, Revlimid, arsenic, SAHA inhibitors, or any investigational medication; a minimum of five days must have elapsed since the administration of growth factors * Prior cytotoxic chemotherapy for another condition treated with curative intent is allowed provided at least 18 months has elapsed between last treatment and enrollment on protocol * Eastern Cooperative Oncology Group (ECOG) performance status 0-2 * Aspartate aminotransferase (AST)/alanine aminotransferase (ALT) =\< 1.5 times the upper limits of normal * Serum bilirubin =\< 1.5x upper limit of normal * Creatinine =\< 1.5x upper limit of normal * No exclusion for blood counts; however, at the time of treatment initiation, white blood cell (WBC) should be \< 30,000/uL (can be controlled with hydroxyurea) * Life expectancy without treatment of at least 12 weeks * Patients with and without FLT3 mutations will be eligible to participate * Patients must have the ability and willingness to sign a written informed consent document Exclusion Criteria * Acute promyelocytic leukemia (FAB M3) * Prior autologous or allogeneic stem cell transplant * Prior azacitidine, decitabine, or midostaurin * Patients with known impairment of gastrointestinal (GI) function or GI disease that may significantly alter the absorption of midostaurin; patients with gastric bypass surgery are excluded * Patients with any other known active cancer (except carcinoma in-situ), concurrent severe and/or uncontrolled medical condition (e.g. uncontrolled diabetes, pulmonary, chronic renal disease, active uncontrolled infection) * Cardiovascular Criteria will exclude a patient from participation in the study will include: * Screening electrocardiogram (ECG) with a QTc \> 450 msec; * Patients with congenital long QT syndrome; * History or presence of sustained ventricular tachycardia; * Any history of ventricular fibrillation or torsades de pointes; * Bradycardia defined as heart rate (HR) \< 50 bpm; * Right bundle branch block + left anterior hemiblock (bifascicular block); * Patients with myocardial infarction or unstable angina \< 6 months prior to starting study drug; * Congestive heart failure (CHF) New York (NY) Heart Association class III or IV; * Patients with an ejection fraction =\< 45% assessed by multi gated acquisition scan (MUGA) or echocardiogram (ECHO) scan within 14 days of day 1 * Poorly controlled hypertension * Known allergy or hypersensitivity to azacitidine, mannitol, or midostaurin * Active or suspicion of central nervous system (CNS) leukemia * Patients with human immunodeficiency virus (HIV) disease or active viral hepatitis * Patients with hepatitis B * Patients with an abnormal chest X-ray and/or any pulmonary infiltrate including those suspected to be of infectious origin; in particular, patients with resolution of clinical symptoms of pulmonary infection but with residual pulmonary infiltrates on chest x-ray are not eligible until pulmonary infiltrates have completely resolved * Pregnant or lactating women * Prohibited medications: PKC412 and its two major metabolites may have a potential of drug-drug interactions with P-gp substrates and CYP3A4 inhibitors, and inducers. An increased anticoagulant effect has been noted in patients treated with warfarin and midostaurin. * Patients who have received any investigational agent within 30 days prior to day 1 * Women of child-bearing potential, defined as all women physiologically capable of becoming pregnant, unless they are using highly effective methods of contraception during dosing and for 3 months of midostaurin medication. Highly effective contraception methods include: * Total abstinence (when this is in line with the preferred and usual lifestyle of the subject. Periodic abstinence (e.g., calendar, ovulation, symptothermal, post-ovulation methods) and withdrawal are not acceptable methods of contraception * Female sterilization (have had surgical bilateral oophorectomy with or without hysterectomy) or tubal ligation at least six weeks before taking study treatment. In case of oophorectomy alone, only when the reproductive status of the woman has been confirmed by follow up hormone level assessment * Male sterilization (at least 6 months prior to screening). For female subjects on the study the vasectomized male partner should be the sole partner for that subject. * Combination of any two of the following (a+b or a+c, or b+c): 1. Use of oral, injected or implanted hormonal methods of contraception or other forms of hormonal contraception that have comparable efficacy (failure rate \<1%), for example hormone vaginal ring or transdermal hormone contraception. 2. Placement of an intrauterine device (IUD) or intrauterine system (IUS) 3. Barrier methods of contraception: Condom or Occlusive cap (diaphragm or cervical/vault caps) with spermicidal foam/gel/film/cream/vaginal suppository In case of use of oral contraception women should have been stable on the same pill for a minimum of 3 months before taking study treatment Sexually active males unless they use a condom during intercourse while taking drug and for 5 months after stopping midostaurin medication. They should not father a child in this period. A condom is required to be used also by vasectomized men in order to prevent delivery of the drug via seminal fluid.