McMaster said his office has been negotiating its own settlement with the drug maker since the spring, The Post and Courier of Charleston reported.
"It's more work for us, but we will get multiple times more money for the taxpayer than if we would have joined the group," McMaster told the newspaper.
The attorney general brushed aside any suggestions that being the only state outside the settlement could be risky, saying the strategy was in South Carolina's best interest.
McMaster, a Republican who also is running for governor next year, refused to say how much the state wants from Pfizer and said there is no way to know how much South Carolina could have received had it been involved in the settlement. A lawsuit hasn't been filed, and a spokesman for Pfizer refused to talk about the situation.
Federal prosecutors called Pfizer a repeating corporate cheat for its illegal drug promotions that plied doctors with free golf, massages, and resort junkets.
The settlement announced last week includes $331 million to be split between 49 states and the District of Columbia, with most of the money going toward Medicaid.
State lawyers are negotiating with Pfizer on behalf of Medicaid and the State Employees Insurance Plan, McMaster said.
"We're confident that the taxpayers of South Carolina will do much better if we fight these claims as we are doing than if we had taken the other route, which was to participate in a group," he said.